Miami feds seize $34 million of bitcoin in fraud case. It’s one of largest seizures in US.

By Jay Weaver

Federal authorities in South Florida routinely confiscate millions of dollars in hard cash, high-rise condos and luxury cars when they convict criminals of drug trafficking, fraud or money laundering.

But in a rare civil case — one of the biggest of its kind in the United States — prosecutors in Miami have seized $34 million in cryptocurrency. The bitcoin fortune was made by a Parkland resident suspected of using the internet to sell people’s account information that had been hacked from HBO, Netflix and Uber, among other popular services.

Prosecutors with the U.S. Attorney’s Office said Monday that they were able to seize the vast sum of bitcoin after recently obtaining a default judgment in Miami federal court. In a lawsuit, they accused the Parkland suspect — who is neither named nor charged — of using anonymous identities on the “Dark Web” to carry out more than 100,000 fraudulent computer transactions between 2015 and 2017.

The suspect was not charged because authorities didn’t have enough evidence to make a criminal case, so instead they targeted his cryptocurrency in the civil case. The suspect, who was questioned by federal agents and whose Parkland home was searched, did not challenge the U.S. government’s move to take his cryptocurrency, according to court records.

At the time the case was filed last October, authorities estimated the suspect’s illicit cryptocurrency had a value of $47 million, court papers show. In a sign of bitcoin’s volatility, the cryptocurrency’s value plummeted to $34 million in only six months.

In the civil case, prosecutors say the Parkland suspect used the Dark Web, a “network of anonymous users and hidden service websites,” to make his illegal bitcoin sales of the HBO, Netflix and Uber account information.

“Dark Web marketplaces are specifically designed to facilitate illegal commerce by working to ensure the anonymity of its administrators, as well as the buyers and sellers who participate in commerce on the website,“ the lawsuit says.

Prosecutors say the Parkland suspect accessed the Dark Web by using the TOR (The Onion Router) Network. It is a special network of computers linked around the world that are designed to hide a user’s internet traffic by concealing the computers’ IP, or Internet Protocol, addresses.

In this case, prosecutors say the suspect used so-called tumblers, which pool multiple transactions to launder one cryptocurrency for another. It is a technique known as “chain hopping,” which authorities say is a violation of federal money laundering laws.

The bitcoin case, called Operation TORnado, was investigated by agents with the FBI, Internal Revenue Service and Homeland Security Investigations. The Miami federal prosecutors who filed the case are: Monique Botero, Mitch Hyman, Nicole Grosnoff and Nalina Sombuntham

Via; Miami Herald


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