Cryptocurrencies are one of the hot topics in today's world of finances and technology, but the situation was not always like that. Before digital coins went big and captured the attention of traders, investors, banks, and media around the world — they were a shady new trend that only a small group of people knew about.
In those days, individuals interested in Bitcoin and the initial altcoins mostly included a handful of academics and tech-nerds who were excited about the new technology's potential. However, it was not long before online criminals operating in the depths of darknet started paying attention as well.
Crypto research and development was slow back then, and many believed that transactions that used Bitcoin are anonymous and untraceable. Today, this is no longer the case, and Bitcoin is now considered to be pseudonymous, at best. However, there are still multiple privacy coins that can provide higher levels of privacy while handling digital coins.
However, some of those who are frequently visiting the darknet and operating outside of the boundaries set by laws were quickly obsessed with crypto payments, and millions of dollars in crypto started exchanging hands every day. The situation did not change for the better even after cryptos came under the spotlight, and the two still maintain a strong relationship, with even more coins ending up in the darker corners of the internet.
As a result, whenever a law enforcement agency managed to uncover one of the criminal operations within the darknet, they usually ended up seizing large amounts of digital assets in the process. There are many examples of this, and we will now review the four largest busts that resulted in millions of dollars in crypto being seized.
The Shutdown of AlphaBay
In July 2017, authorities managed to shut down a darknet website called AlphaBay, which led to a number of arrests, including the website's founder, Alexandre Cazes. At the time when the site was brought down, it had over 400,000 users, 369,000 listings, as well as between $600,000 and $800,000 in transactions, daily.
Cazes was arrested in Thailand and was held in the country's Narcotics Suppression Bureau headquarters. At the time, the plan was to send him to the US, although he committed suicide before this was possible.
AlphaBay was known for only using digital currencies as a payment method, with the most used coins being Bitcoin, Ethereum, ZCash, and Monero. After the website was brought down, the authorities confiscated 1,605.05 BTC, 8,309.28 ETH, 3,692 ZEC, and a smaller amount of Monero. In total, the seized amount exceeded $23 million.
Department of Justice's Darknet Undercover Operation
On June 26th, 2018, the US DoJ made an announcement claiming that around 35 darknet vendors were arrested in an undercover operation. The operation was not focused on cryptocurrencies, but on large amounts of firearms, narcotics, and alike. However, the bust also resulted in the confiscation of over $22 million in crypto, as well as $3 million in gold bars.
The operation was performed by five, or potentially more, federal agencies which also managed to find a number of devices used for mining Bitcoin, which was one of several seized coins.
Silk Road Crackdown
Silk Road is well-known today for being a first darknet black market where internet users managed to find many different kinds of illegal services and merchandise, such as weapons, drugs, and alike. It was founded by an individual called Ross Ulbricht, who was arrested in October 2013.
Ulbricht had no lack of crimes associated with his name, with hacking, drug trafficking, and money laundering being only some of them. He also conspired to have at least six individuals assassinated simply because he believed that they might be able to harm the Silk Road.
However, the authorities managed to crack down on the Silk Road as well, and in the process, they initially seized around 26,000 Bitcoin in early October. By the end of the month, the total amount of seized BTC rose to 144,000, which is around $5 billion in today's prices. Back then, however, Bitcoin's value was much lower, and the entire amount was between $100 and $200. Due to his crimes, Ulbrich was sentenced to life in prison with no chance of parole.
The Bust of Hansa Market
Authorities managed to shut down Hansa Market and arrest a number of its operators very shortly after the AlphaBay website was taken down. While Hansa Market was smaller in terms of revenue and traffic than AlphaBay, the bust is still considered to be a significant achievement, as it received many new users after AlphaBay went down.
It even had the potential to replace AlphaBay, as the website left many users in search of the new location for the online drug trade.
However, this website was taken down as well after the Dutch police managed to trace its servers to a Lithuania-based company. Two of the website's administrators were arrested by Germany's law enforcement in June 2017, and the Dutch police managed to take over the website. For a time, they continued to run the site and monitor the activities, which lasted for almost a full month.
During this time, the police gathered information and evidence against the website's administrators and users. When they finally shut the site down, they also seized around 1,200 BTC.