Darknet Drug Operations Hit as Feds Move to Seize $54 Million in Crypto Crime Bust

cryptonews.com:

The U.S. Department of Justice announced on Thursday the seizure of 30,000 Ether (ETH), valued at over $54 million, that had allegedly been used for illegal narcotics distribution in New Jersey. The assets were traced back to Christopher Castelluzzo, who was involved in narcotics operations on darknet markets from 2013 to 2015.

The case first began in 2010 when Castelluzzo started his drug distribution business. It was not until 2013 that he transitioned to using Bitcoin on darknet markets for his narcotic transactions, however.

According to the DOJ statement, Castelluzzo initially acquired the 30,000 ETH during its ICO in July 2014. He purchased the ETH using 15 BTC derived from his illegal narcotics operations. At the time, the ETH was only worth about $9,000. Its value has since skyrocketed to over $54 million as Ethereum’s price has surged.

In addition to the Ethereum, Castelluzzo also obtained 30,000 Ethereum Classic in 2016. He then used these funds to acquire various other cryptocurrencies in an attempt to launder his illicit profits. The scheme was ultimately foiled when Castelluzzo was arrested and incarcerated in 2015 for his role in the drug distribution ring.

While in prison, Castelluzzo tried to launder the 30,000 ETH he had purchased back in 2014. According to the Justice Department, his plan was uncovered after intercepted recorded prison telephone calls from 2021 revealed the details. Authorities were able to seize the funds before they could be laundered.

U.S. Attorney Philip R. Sellinger emphasized that the civil forfeiture action seeks to recover millions in crypto allegedly stemming from drug sales.

“Whether it’s as simple as bags of cash or as sophisticated as cryptocurrency, we will take the steps