Dutch authorities, in cooperation with officials in the US, Australia, Lithuania and Morocco, have arrested ten people suspected of running a multi-million dollar bitcoin laundering ring.
The suspects laundered “around 15 to 20 million Euro (16 to 22 million dollars),” a spokesperson for Openbaar Ministerie (OM), the Dutch public prosecution service, told Motherboard in a phone interview.
In all, 15 addresses were raided on Tuesday throughout Rotterdam, Zoetermeer, Almere, Dordrecht, Zaandam, Schiedam, The Hague and Putten, according to the OM press release. Luxury cars and cash was confiscated, and police also seized bank accounts and an unspecified amount of bitcoin. The OM write that the launderers were likely working with proceeds generated from the dark web.
The investigation started when banks started noticing large sums of money being deposited into accounts and then immediately withdrawn, the OM spokesperson said.
“A lot of money was sent to several accounts, and as soon as possible bitcoin cashers took the money out again,” she said. Dutch newspaper De Telegraaf added that these fast-moving withdrawals were being done through ATMs.
The OM spokesperson declined to comment on how exactly the suspects themselves were identified. “That's part of the investigation we don't talk about,” she said.
When a dark web dealer completes a transaction, they are typically paid in the psuedo-anonymous digital currency bitcoin. But then to actually make any real use out of that wealth, the dealer likely needs to convert their bitcoin into fiat currency, or cash, so it can be more easily spent or invested into something else. For this, there are a few different approaches a dealer can take.
Several “cashout” vendors advertise their service directly to dark web dealers, according to a copy of the dealer-only section of the AlphaBay market forum, one of the most popular marketplaces, shared with Motherboard.
One launderer will stealthily send pound or euro notes in the mail in exchange for bitcoins. It's a “fast, safe and easy alternative to mainstream cashing out methods,” the vendor writes. These sort of services are also sometimes advertised on the marketplace itself for anyone to take advantage of.
In the leaked dealer forum, other vendors recommend just selling any accumulated bitcoin on legal exchange sites such as LocalBitcoins.com.
It appears that at least some of the suspected launderers' proceeds were handled this way, albeit on a very large scale, according to the OM press release. The suspects first bought bitcoin from traders who had likely acquired their funds through illegal transactions on the dark web. From here, the launderers sold the bitcoin on legitimate trading sites, in exchange for euros, which can then sent into their bank accounts.
Regarding the publicly available information on the case, some things are particularly noteworthy, a source with knowledge of dark web money laundering told Motherboard.
“Two things stick out at me, which are Morocco and the ATM withdrawals,” the source said. “Morocco is a piece of piss to push cash through; a lot of prepaid cards are sold from there and that is probably why.”
“Also, ATM [use] draws attention as most businesses have a fairly constant float, so their balance generally has a steady up and down pattern to it on certain days of the month due to recurring bills. So filing and emptying the account very often makes the graph looks very odd.”
On top of this, “It is likely the drug sellers and money launderers were the same group, they don't venture far,” the source added. Indeed, 15 kilograms of precursor to manufacture the drug ecstasy was also seized during the raids, Reuters reports.
The Federal Bureau of Investigation (FBI) did not respond to a request for comment, and the Dutch Ministry of Finance did not respond in time for publication.