Silk road was one of the most famous dark web stores, seeing billions of dollars being spent through the platform to buy narcotics, weapons and just about everything else under the sun. Back in October 2013, the FBI shut down the Silk Road, throwing its founder – Ross Ulbricht – behind bars for life. Fast forward 6 years and a Bitcoin account linked to large-scale money laundering from drug deals on the Silk Road platform became active once more. The New York branch of Homeland Security Investigations (HSI) swooped into action and arrested the 60-year-old man behind the account.
Using Blockchain Analysis to Catch the Bad Guys
Hugh Brian Haney was arrested after he moved his incredible stash of Bitcoin that he accrued from laundering money used in drug deals from the Silk Road days. The HSI had teamed up with the U.S. Justice Department’s Southern District of New York (SDNY) to conduct blockchain analysis to track the Bitcoin and keep an eye on it. As soon as that Bitcoin hit an exchange, it would flag up in the system and the two agencies were alerted.
As soon as the exchange questioned where the large sum of Bitcoin came from, Haney stated that it was from mining proceeds. When that $19 million worth of BTC was finally converted to USD and withdrawn from the exchange, the SDNY froze Haney’s account at the bank and busted down his front door.
Not the Smartest Criminal
Perhaps it was owing to his age and how crime worked back in the day, but Haney made a huge mistake when transferring his illicit Bitcoin. If you robbed a store or bank 15 or 20 years ago, the safest thing to do would be to sit on the cash for a number of years before beginning to spend it – exactly what Haney did. However, Bitcoin is completely traceable, meaning that this method simply doesn’t work in crypto.
Instead, Haney could have used a decentralized exchange to swap that Bitcoin into a privacy focused token such as Monero. This could have concealed his identity for a longer period of time and would have allowed him to possibly get away with the crime. Additionally, cashing out in small chunks would have been a smart idea – a big lump sum of $19 million does raise certain red flags.
Silk Road Drug Lords Paying for Their Crimes
Haney isn’t the only Silk Road drug lord that’s been caught lately. Back in April, Matthew Phan was forced to forfeit 281.41 Bitcoins after a judge ruled that he accrued it from selling drugs on Silk Road. Meanwhile, back in February a nurse was arrested for selling prescription drugs she stole from work on a number of dark web stores, making a huge profit in the meantime.
Had Haney been smarter about cashing out his illegally obtained fortune, he might have managed to get away with it. That still doesn’t make dealing drugs acceptable, and Haney will likely spend the rest of his life behind bars.