US Court Seizes $12 Million Worth Of Assets from Deceased AlphaBay Dark Web Mastermind


Earlier this month, the Fresno Division of the US District Court for the Eastern District of California finalized a lengthy civil forfeiture lawsuit to seize the assets and belongings of Alexandre Cazes, a Canadian citizen who committed suicide while serving time in a Thai prison last year. The 14-month-long case began after Alexandre hanged himself shortly after being arrested for operating in the AlphaBay online black market.

Apparently, Cazes, who avoided trial by killing himself, oversaw and benefited from the sales of illicit products and services to consumers located in the US and overseas counties through his AlphaBay dark web marketplace. This was before law enforcement officers shut down the website at the time of his arrest. The charges levied against Alexandre included identity theft, racketeering, fraud, trafficking, and money laundering. He was arrested on June 7, 2017, at his home.

According to a video footage depicting the arrest of Alexandre, officers from the Royal Thai police, DEA and FBI had to crash a squad car at the gate of the suspect's home as a decoy to prevent the possible encryption or deletion of digital evidence related to the crimes. The video was captured at Cazes' Bangkok mansion by FBI special agent Nicholas Phirippidis. It was played at the International Conference on Cyber Security which was held at the beginning of the year.

The evidence included multiple administrative accounts logged into AlphaBay forums and servers, as well as several text documents containing login credentials for the AlphaBay website. These were found on an open laptop in the suspect’s bedroom during a raid at his home. Moreover, the police also discovered a document that estimated Alexandre’s net worth, said to be around $23 million. This file recorded the colossal amounts of money, luxurious real estate properties and high-end cars that Cazes supposedly earned form levying commissions on transactions conducted over the AlphaBay platform.

Notably, the AlphaBay website did not accept payments made in fiat currencies. For this reason, Alexandre accumulated over $8.8 million worth of digital currencies, including 1,605 BTC, 8,309 ETH, 3,692 Zcash, and an unspecified amount of Monero. To avoid detection by authorities, Cazes moved client funds into several accounts belonging to shell corporations. This process was facilitated by ‘mixers’ and ‘tumblers’, programs that split, distribute and recombine digital currencies on several wallets, thereby concealing the transaction history.

The enforcers also established that the business and exchange wallets listed in the aforementioned document were linked to bank accounts registered under Alexandre and his wife, Sunisa Thapsuwan, a native Thai citizen. The reason behind the opening of the accounts, which were registered in the Caribbean, Switzerland and Thailand, was to liquidate digital currency tokens into fiat money. After the conversion of the funds, the couple splashed the money on four flashy vehicles, including $900,000 on a 2013 Lamborghini Aventador bearing a customized license plate written ‘TOR’ ( alluding to the privacy-focused web browser), $293,000 on a Porsche Panamera, $81,00 o a Mini Cooper, and $21,00 on a BMW motorcycle. In addition, the two also acquired six beachfront villas located in Cyprus, St. Phillips South Antigua and Barbuda and Thailand. All of the assets mentioned above were entered as claimants in the forfeiture case against Alexandre, his wife and parents, who may have befitted from proceeds generated by the illegal AlphaBay business.

Throughout its existence, from 2014 to the time of Alexandre's arrest, AlphaBay grew into the busiest dark web e-commerce platform of all time. The website had an estimated 400,000 users, a similar number of listings and daily transactions were averaging around $800,000. AlphaBay's infamy peaked in 2015 when vendors on the marketplace sold confidential data stolen from Uber, an American ridesharing app and TalkTalk, a leading British broadcasting and telecommunications services provider. In 2016 and 2017, AlphaBay suffered hacking breaches which resulted in the exposure of over 213,000 private conversations amongst users.

AlphaBay vs. Silk Road

In comparison with Silk Road, an earlier dark web platform that was infamous for all kinds of illicit transactions, AlphaBay was at least ten times bigger than its contemporary. Like AlphaBay, the Silk Road was shut down after US law enforcers arrested its founder, Ross Ulbricht, in San Francisco, California. The Silk Road had existed for two years. Ulbricht, an alumnus of the University of Texas, is currently serving a life sentence at a Colorado state penitentiary. He was convicted at the US District Court for the Southern District of New York. The reason behind Ross’ lengthy sentence was the allegation of murder-for-hire. Though he was later acquitted of this charges, for lack of evidence, the original sentence is yet to be reduced.

Ross's defence team has been working hard towards the reduction of his sentence, but their efforts have been futile. Prior to the District Court’s refusal, two appeals filed at the US Supreme Court arguing that the convict’s Fourth and Six Amendment right had been violated were denied for lack of merit. The first appeal contested that the prosecution overlooked evidence revealing investigative malfeasance. Apparently, some investigators pocketed evidence taken during the Silk Road investigation. In the second appeal, the lawyers argued that Ross’s internet traffic data was confiscated without a relevant warrant and that the presiding judge had failed to give solid reasons behind his sentencing.

After it became apparent that the courts would not reduce Ulbricht's sentence, his family and friends have taken to social media to advocate for his release. To this end, they have created a Twitter account whose handle is @Free_Ross. The account has been lobbying congressional leaders and political influencers to support their cause. In July, the account announced that a petition created on Change.org requesting President Trump to grant clemency to Ross had collected over 80,00 signatures.

Regarding the difficulty of arrest, Alexandre’s apprehension was easier compared to nabbing Ulbricht. This is because Alexandre listed his personal email address ([email protected]) as a contact on the AlphaBay website. On the other hand, Ulbricht’s online nickname ‘Dread Pirate Roberts’ has been a subject of serious contention. According to the Ulbricht’s attorneys, their client is a victim of framing. Instead, these lawyers are laying the blame on Mark Karpeles and Ashely Barr, founders of the now fallen cryptocurrency exchange called Mt. Gox.

While both Alexandre and Ulbricht were investigated by undercover agents, the police employed more aggressive tactics in the latter’s case. As per revelations made during the trial, the investigators planted tapping devices on Ulbricht’s computers without following the due process. Furthermore, plainclothes police interacted with Ulbricht with an intention of earning his trust. In Cazes’ case, the investigators relied on the suspect’s paper trail. This might be the reason why Alexandre’s family has not filed a complaint against the US government.

Effects On The Crypto Space

If Cazes did not commit suicide, he would have been extradited to face his charges in an American court. Similar to the Silk Road, AlphaBay was located on the dark web, a secret network within the internet that is only accessible using encrypted software programs and advanced routing protocols such as I2P and Tor.

The rising popularity of the internet prompted government agencies to start investigating the dark web, where the rate of cyber crimes was increasing at an alarming rate. The ease at which controlled substances were being exchanged caused laws enforcers and the Department of Justice to shift their focus to this menace. This battle is still ongoing, with the justice department having established a dedicated division to handle cybercrimes. In March, Ronald Wheeler, an Illinois resident, was charged at the US District Court for the Northern District of Georgia for promoting AlphaBay.

The dark web convictions have marred the image of digital currencies. The pioneering virtual currency, Bitcoin, has often been regarded as the preferred payment utility for delinquent criminals. Since dark web platforms accept crypto payments only, the volume of crypto trading was significantly higher when AlphaBay and the Silk Road were operational.

Currently, the crypto sector is still struggling to shake off this negative reputation. Prominent businesspeople such as Microsoft's Bill Gates and JP Morgan Chase's Jamie Dimon have labeled digital currencies as an instrument that facilitates money laundering and tax evasion. In defense, crypto proponents have argued that fiat currencies have been sued to conduct these vices for many years with higher degrees of secrecy.

Although replicas of the Silk Road and AlphaBay have emerged, none of them has managed to outdo the legacy of their predecessors. Three years ago, the FBI and Interpol shut down the second coming of the Silk Road, called the Diabolus Market. The third version of Silk Road, known as Silk Road 3.0 Reloaded, collapsed due to bankruptcy in 2017 after operating for only one year. Empire Market, the heir to AlphaBay’s throne, was established in March and is still operational.

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