- The U.S. government has seized millions of crypto.
- The funds are connected to a narcotics syndicate.
- Authorities issued a warning to criminals following the seizure.
The U.S. federal government has seized millions of dollars in crypto following a sting operation that connected the funds to a narcotics syndicate operating in and around New Jersey.
On November 2, the United States Attorney’s Office for the District of New Jersey filed a civil forfeiture action to recover crypto worth $54 million allegedly obtained from the proceeds of a 2010-2015 narcotics distribution scheme.
Drug Syndicate Invested in Crypto
Per the DOJ’s complaint, as captured in a Thursday press release, the ringleader of the drug syndicate, Christopher Castelluzzo, and his co-conspirators sold narcotics on darknet websites. They received payments in Bitcoin (BTC). This happened around 2013.
Sponsored
A year later, during Ethereum’s Initial Coin Offering in July 2014, Castelluzzo used some of the BTC earned from drug proceeds to acquire 30,000 Ether at $0.3 per ETH.
While serving concurrent 20-year federal and state prison sentences for drug-related convictions, Castelluzzo’s $9,000 Ether stash grew to $54 million, and he had a well-thought-out plan of laundering the money before federal law enforcement came swinging.
Sponsored
“Before he could do so, however, the United States learned of Castelluzzo’s efforts to launder the cryptocurrency through recorded prison telephone calls in 2021, intervened, and seized Castelluzzo’s cryptocurrency holdings traceable to his drug trafficking crimes,” the statement read.
While lauding his office for the seizure, U.S. Attorney Philip R. Sellinger put criminals on notice, stating that the government would relentlessly pursue and seize funds obtained from illicit activities, “whether it’s as simple as bags of cash or as sophisticated as cryptocurrency.”
Criminals Using Crypto Put on Alert
FBI – Newark Special Agent in Charge James E. Dennehy echoed Sellinger’s sentiments and had a message for criminals laundering their proceeds through crypto.
“Our forfeiture action of $54 million should serve as a lesson to those who mistakenly believe we can’t trace their illicit behavior or their ill-gotten proceeds. We will successfully hold all criminals responsible in the open, with real world consequences.” Dennehy said.
To date, U.S. authorities have seized billions of dollars in crime-linked crypto, including a recent $1.7 million seizure by the FBI.
Read how the FBI tracked down crypto stolen by North Korean hackers:
FBI Tracks Down 1,580 Bitcoin Stolen by North Korean Hackers
Stay updated on the biggest hacks to ever happen in crypto exchanges:
12 Biggest Hacks in Crypto Exchange History
