U.S. authorities seize $54 million in Ethereum from convicted drug dealer By Investing.com

© Reuters.

U.S. authorities, led by U.S. Attorney Philip R. Sellinger, have seized $54 million worth of cryptocurrency from Christopher Castelluzzo, a convicted drug dealer operating out of Lake Hopatcong, New Jersey. The seizure is part of an ongoing civil forfeiture action aimed at dismantling illicit activities financed through cryptocurrencies.

The cryptocurrency was confiscated from a narcotics distribution scheme that Castelluzzo and his co-conspirators operated between 2010 and 2015. The network utilized the darknet to exchange drugs for cryptocurrencies, amassing 30,000 ether during Ethereum’s 2014 Initial Coin Offering and another 30,000 from in 2016.

In 2021, while serving concurrent 20-year prison terms, Castelluzzo attempted to launder his ill-gotten gains by moving 30,000 ether out of the U.S., potentially to the Bahamas. However, his efforts were thwarted by the authorities.

FBI Special Agent James E. Dennehy underscored this case as an example of how criminals exploit cryptocurrencies on the darknet. The incident highlights increasing concerns about the role of cryptocurrencies in facilitating illegal activities.

Reports indicate a rise in crypto-mediated drug trades on Darknet Markets (DNMs) and Cryptocurrency Exchanges (CEXs), especially on Russian-language platforms which accounted for over 80% of the $1.49 billion DNM transactions in 2022. In 2023 alone, $32 million was found in drug dealers’ CEX wallets.

The U.S. Marshals Service has so far auctioned off $366 million worth of seized cryptocurrency. Despite a slow conversion process and a 450% year-on-year growth in payments, as of today, the U.S. government holds approximately 200,000 Bitcoins valued at $6.69 billion, up from $5.3 billion on October 15.

The U.S. government has accumulated approximately 200,000 Bitcoins (valued at about $5 billion) through seizures related to criminal activities, including those perpetrated by cybercriminals and on darknet markets. The Castelluzzo case is just one example of the broader issue of cryptocurrency misuse and the challenges authorities face in tracking and seizing these digital assets.

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