An affidavit of Mathew Larsen, a Special Agent with Homeland Security Investigations, who tracked down David Burchard, one of the largest Silk Road marijuana and cocaine vendors, has revealed that there exists a digital currency task force in the United States, Coinfox reported.
“I am part of a digital currency task force focused on identifying the use of digital currency to launder the proceeds of criminal activity. As part of this task force, I have been involved in several investigations into unlicensed digital currency exchangers and narcotics distributors on the darkweb who use digital currency to receive payment for the sale of narcotics”, according to Larsen’s affidavit.
It noted that dark web market places such as Silk Road, often only accept payment through digital currencies such as bitcoin, adding that large amount of bitcoin sales or purchases by a person is often indicative of the involvement in trafficking of illegal items.
“These investigations have brought my attention to numerous individuals who have been cycling through large amounts of Bitcoin. One of those individuals is David BURCHARD”, Larsen said. “I began investigating David Burchard based, in part, on his sale of millions of dollars of Bitcoins to an unlicensed digital currency exchanger. I was, and continue to be, unable to identify a legitimate source of Burchard’s large amount of Bitcoins”, Larsen said.
The document goes on to explain how Homeland Security identified Burchard as a Marijauna Distributor.
Digital currencies such as bitcoin have been quite popular among criminals for making online payments. The affidavit noted that while the public addresses of those engaging in bitcoin transactions are recorded on the public ledger, the true identities of the individuals or entities behind the public addresses are not recorded. However, cryptocurrency exchanges have started to tackle this problem by conforming to Know Your Customer (KYC) and Anti-Money Laundering and Countering Financing of Terrorism Act AML/CFT guidelines.
The case has also highlighted how people evade these requirements. The document says that Burchard began trading bitcoin in 2012 when the price rose from $41 to over $1,200 per bitcoin.
“He [Burchard] stated many of his clients conduct Bitcoin exchanges with him because they do not want to give up their personal information, which would be required with a legitimate digital currency exchange company”, it said.
