What has happened?
New York State's prosecutors have secured their first conviction for money laundering involving cryptocurrency.
What does this mean?
The Manhattan District Attorney Cyrus R. Vance has announced that Callaway Crain and Mark Sanchez, both 35, have entered guilty pleas for laundering more than $2.8 million in cryptocurrency and Western Union payments.
The revenue has been generated through the sale of anabolic steroids and other controlled substances on the dark net.
Crain and Sanchez pleaded guilty to money laundering and criminal sale of a controlled substance and face between two-and-a-half to seven-and-a-half years in prison.
Between March 2003 and January 2018, the two defendants sold injectable and oral steroids, medication to counteract those steroids as well as other drugs via a series of websites called "NextDayGear", shipping more than 10,000 packages across the U.S.
"The defendants purchased steroids, precursor chemicals, and other controlled substances wholesale from China and other countries. After obtaining the chemicals and substances, they mixed, pressed, and packaged them, often under brand names they created; advertised and sold them online; and shipped them to customers in all 50 states and sixteen countries," Vance said.
Customers typically paid in bitcoins, which the defendants laundered through one or more intermediary cryptocurrency wallets to hide the source of the money.
The bitcoin was then converted into U.S. dollars using a cryptocurrency exchange service, before the money being deposited into the defendants' bank accounts.
Western Union payments were laundered through the use of false identities or international wire transfers from foreign-based receivers.
Vance said:
“These defendants raked in crypto and cash worth millions on their full-service website that sold prescription-free counterfeit steroids and other controlled substances to customers in all 50 states. Online drug sellers who do business in New York should take note: whether you’re operating in plain sight or in hidden corners of the dark web, my Office has the skills and resources to follow the money, shut down your business, and hold you accountable.”
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