IRS Catches Drug Dealer in Bitcoin Sale Sting

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  • The IRS has arrested a suspected dark web drug merchant through a sting operation
  • An IRS agent posed as Mr. Coins and swapped $180,000 in cash for XMR and BTC over nine months
  • The suspect admitted in texts that the money had come from dark web drug sales

The Inland Revenue Service (IRS) has caught a drug dealer in a sting operation using a peer-to-peer Bitcoin exchange. An IRS agent posed as Bitcoin trader ‘Mr. Coins’ on, a site that emulates the better-known Local Bitcoins and allows buyers to arrange Bitcoin trades off exchanges, and convinced the suspect to send him $180,000 in cash for Bitcoin and Monero tokens which it was later revealed were the result of dark web drug sales.

IRS Agent Posed as Bitcoin Buyer

Mr Coins posted to Local Cryptos to offer the purchase of bitcoin for cash via mail, making the offer more attractive by offering above-market prices. A simple WhatsApp or Wickr message would be all that was required to get conversations going. One member, Lucifallen21, got in touch to say that he was interested in buying bitcoin rather than selling, and the IRS took him up on the offer. The IRS was quickly able to identify him as Chase Hite from Indiana and began negotiations over the sale.

Payments Sent Wrapped in Clothes

Hite agreed to send $15,040 in cash wrapped in clothes to the agent in return for 1.59. This was followed by several more cash payments sent in similarly dodgy formats, totaling $180,000 over the span of nine months, with Hite buying both XMR and BTC from Mr. Coins. A package of $28,000 cash was flagged up by the post office, which allowed the IRS to monitor any claims made on it. This they were able to do, with someone from Hite’s phone number calling the post office to ask about it.

Conversations between Mr. Coins and Hite revealed that the latter was involved in the sale of “pills and opioids” on the dark web, with the IRS able to positively link him to all the activities through his fingerprints on one of his packages. Hite was arrested in July but has yet to enter a plea.