From speculation about its inherent value to theories about it being the payment method of choice for criminals, Cryptocurrency is having a tough time keeping a clean name. One of the most common accusations is that Cryptocurrencies perpetuate the sale of illicit drugs, a view recently expressed by United States Treasury Secretary Steven Munchin. We take a look at the impact of Cryptocurrency on illegal drug sales and whether it should shoulder more of the blame than cash.
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The watershed moment for the U.S. taking decisive action against illicit drugs being purchased with Cryptocurrency happened in 2013, when FBI agents rushed into the San Francisco Public Library to arrest Ross Ulbricht, a man who played a central role in the digitalization of the international drug trade. Operating under the pseudonym ‘‘Dread Pirate Roberts,” Ulbricht was the mastermind behind the Silk Road — an anonymous, Amazon-like marketplace located on the darknet — which let users buy and sell anything, regardless of legality. Although the site listed weapons, stolen credit card details as well as legal products, illicit drugs were by far the most common listing. The Silk Road pioneered the use of Tor, the network software used to access the darknet, and Bitcoin (BTC) escrow to conceal purchaser and seller identities and their activity.
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Although U.S. agents had hoped the seizure of the Silk Road would curb darknet activity, the news site DeepDotWeb wrote that the bust was “the best advertising the darknet markets could have hoped for,” with a number of copycat sites popping up in subsequent years. In 2014, the FBI seized 27 darknet sites during Operation Onymous, a joint effort between the FBI and the European Union Intelligence Agency Europol to stamp out illicit markets. In 2019, darknet markets are still selling illicit drugs that can be purchased with Cryptocurrency, but U.S. law enforcement continues to take a hardline approach, arresting a couple in California on Aug. 6 for selling drugs on the darknet in exchange for Bitcoin and Bitcoin Cash (BCH).
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