09.12.2021

Tax officials impersonate cryptocurrency trader to catch drug dealer

The criminal was persuaded to transfer $ 180,000 in cash to an account under the nickname Mr Coins on the P2P exchange LocalCryptos.com. Similar transactions have been carried out before, but the fact that the IRS deliberately passes off its employees as crypto traders is almost unique. Let’s talk about what is happening in more detail.

In a recently declassified special operation, the IRS passed off its employees as a crypto trader to expose a suspected darknet drug dealer.

By tradition, let’s start with an explanation. P2P platforms are trading platforms that allow participants to conduct transactions for the purchase and sale of cryptocurrencies among themselves. That is, in essence, this is the place where buyers and sellers meet.

At the same time, the platform acts as an escrow account, that is, an intermediary and a safe place where money is kept until the terms of the transaction are fulfilled. As soon as each of the parties confirms the absence of problems, the funds are transferred from the account to the buyer’s wallet.

The LocalBitcoins website works according to this principle, with which we got acquainted in detail last year. Inside the article, the principles of choosing sellers, the stages of the transaction, and other little things are described.

Note that this platform is getting less and less interest among the residents of Russia. For example, this is the chart of trading volumes on LocalBitcoins in the Russian Federation in BTC. As you can see, in 2021, the indicator decreased almost steadily.

bitcoin cryptocurrency trading

Trading volumes in BTC on LocalBitcoins in Russia

The situation in rubles is a little better, however, in the summer of 2021, a decline in interest in Bitcoin among platform users is also noticeable. Obviously, investors were affected by the market crash in May, the details of which can be found here.

bitcoin cryptocurrency purchase

Trading volumes in rubles on LocalBitcoins in Russia

The day before, a user of a similar platform in the United States was caught by law enforcement agencies.

How to catch cryptocurrency criminals

In June 2020, IRS officials posted an advertisement on the LocalCryptos platform on behalf of Mr Coins to buy Bitcoin at an above market price. Those wishing to close the deal had to use encrypted conversations in Wickr or WhatsApp to communicate.

screenshot service platform

Screenshot of Mr Coin profile

Some time later, the “victim” of the operation was caught, Decrypt reports. She was the suspected drug dealer Chase Hight of Evansville, Louisiana. Under the nickname Lucifallen21, over several transactions, he sent 180 thousand dollars to Mr Coin’s account, waiting to be exchanged for bitcoins. In correspondence with Hight, IRS officials said the $ 28,000 package had been intercepted and marked as lost by the postal service.

The suspect made a phone call to the postal service, where his number was traced – this is how the police managed to establish his address and detain him. Hite’s prints matched those on the package. He was indicted in July in the Eastern District of New York.

Thanks to the joint efforts of law enforcement agencies and analytical companies that track transactions on the blockchain, illegal business has long ceased to be completely “hidden” behind the anonymity and decentralization of Bitcoin.

However, criminals are still forced to use BTC, since it has worldwide recognition even among people unfamiliar with digital assets and a large number of ways to exchange coins for ordinary money in almost any country in the world. At the same time, as former CIA Director Michael Morell noted earlier, the crypt is not suitable for criminals because of its main feature in the form of an open blockchain. Nevertheless, when a person’s real identity is linked to his addresses in the cryptocurrency network, all the activity of a particular attacker will be visible to anyone.

We believe that this situation should once again remind the world that cryptocurrencies are not by default a tool for criminals, as bank representatives once said. They are great for transferring value and preserving it, however, due to the transparency of the blockchain, scammers are unlikely to actively use coins. Therefore, this technology is better to support than to fight it.

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