The Dark Web Bust

2000 Bitcoins, Hard Cash & Gold Bars

I think we can lay rest the claim that Bitcoin is used for crimes only, considering cash and gold bars (fiat system) seems to be thriving in the latest Dark Web crimes bust.

The US Department of Justice, together with multiple government agencies such as the Homeland Security, The Secret Service, Postal Inspection Service, and the DEA have busted over 35 dark web drugs and arms dealers across the nation.

To be clear, these are the drugs and arms the government didn’t deal themselves, but notorious crime syndicates on the Dark Web (which is why this is a bust and not a government investigation into their own operations).

The different agencies confiscated military grade weapons, drugs and drugs manufacturing equipment.  On top of this they also seized over $30 million dollars in cash, gold bars and around 2000 Bitcoins (which alone totals to over $12 million)

The Department of Justice said in their press release that it was “a year long coordinated national operation that used the first nationwide undercover action to target vendors of illicit goods on the Darknet”.

Agents from the HSI acted as money launderers on the dark web marketplace such as the Silkroad, AlphaBay, Hansa and others, exchanging cryptocurrencies for cash.

Yes you read that right, the government itself used cryptocurrencies in crimes in order to lure in criminals. With this tactic the different levels of federal agencies were able to root out the network of black market dealers.

“Through this operation, HSI New York was able to identify numerous vendors of illicit goods, leading to the opening of more than 90 active cases around the country. The Money Laundering and Asset Recovery Section (MLARS) of the Department of Justice’s Criminal Division, working with more than 40 U.S. Attorney’s Offices throughout the country, coordinated the nationwide investigation of over 65 targets, that lead to the arrest and impending prosecution of more than 35 Darknet vendors,” the press release states.

Nearly all the charged individuals used bitcoin or other cryptocurrencies to some degree in their operations. In one case, the federal officials are seeking the forfeiture of an additional 4,000 bitcoin that they suspect to be tied to online drug sales. If seized, the supplementary stash will put the government’s cryptocurrency requisitions to just over $40 million.

“The Darknet is ever-changing and increasingly more intricate, making locating and targeting those selling illicit items on this platform more complicated. But in this case, HSI special agents were able to walk amongst those in the cyber underworld to find those vendors who sell highly addictive drugs for a profit, HSI Acting Executive Associate Director Derek Benner states in the official press release. “The veil has been lifted. HSI has infiltrated the Darknet, and together with its law enforcement partners nationwide, it has proven, once again, that every criminal is within arm’s reach of the law.”

This investigations findings came after Congress’ own efforts to police crimes online trafficking and the use of cryptocurrencies. The findings went public just a day after the House of Representatives passed the “Fight Illicit Networks & Detect (FIND) Trafficking Act of 2018 (H.R.6069). It’s a bipartisan bill : “to study how virtual currencies and online marketplaces are used to facilitate sex or drug trafficking and propose regulatory and legislative actions to put an end to these illicit activities.”

Rep. Juan Vargas who proposed the bill, expressed in a press release that the House’s approval is “an important first step in helping Congress understand the full extent of how virtual currencies are being used to facilitate drug and sex trafficking and will help us propose effective legislative solutions to fight these crimes.” As the bill moves up to Congress’ upper house, he “[hopes] to see the same level of support for this legislation in the Senate.”

In a 2017 National Drug Assessment, the U.S. Drug Enforcement Administration found that cryptocurrencies like Bitcoin, Dash, ZCash and Monero —(with Dash, Zcash & Monero being relatively anonymous) — have become increasingly popular payment options for dark web trade. Along with fueling the human trafficking market, they are also funding marketplaces that are contributing to America’s growing opioid crisis, the administration claims.

This though implies that fiat and other methods such as wiring funds wasn’t also prominently used in human trafficking, drug trafficking and other crimes on the Dark Web. Cryptocurrencies aren’t new just this year, and have existed since 2009, Bitcoin being the most prominent. But of course the Deep Web existed before 2009, and was active and full of crimes and trafficking prior to Cryptocurrencies birth.

This investigation also implies that governments like the US don’t sell weapons to Dictators and genociders ,which we have seen a track record of throughout history. So the governments readiness to blame cryptocurrencies solely for crimes on the Dark Web is biased set to fit a narrative that ‘only the government can commit illicit crimes’.

The growing American opioid crisis also comes after the US illegal invasion and occupation of Afghanistan (which they remain in to this day).

What do you think? Yes cryptocurrencies are being used to commit crimes, but Fiat and gold bars also have track records of being used to commit crimes, both on the Dark Web and on the government level. Should we not then first deal with Fiat’s crisis with money laundering and crimes deals?

Cheers,
A.Yasir

John McAfee’s Not Dead

He’s Alive & McAfee’ing It

The crypto internet was a buzz these last few days after Cyber Security & crypto-expert John McAfee posted a picture of him at the hospital, after what he says was an attempted poisoning to end his life. He went on to say:

“My enemies managed to spike something that I ingested,”
“However, I am more difficult to kill than anyone can possibly imagine. I am back.”

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He’s been tweeting from the hospital, to let his fans and supporters know he’s alright and in stable condition in typical John McAfee style- strong, ‘no shit’ and in your face.

He bashed on panic sellers and continues to promote Docademic and even sent out a mini witch hunt for this guy.

johnmcafeescreenshot1

In all, John McAfee is in good spirits, back in the comfort of his home, and keeping it real for the cryptocurrency community. It’s left to see if this ‘assassination’ attempt pans out with any evidence given to the general public. But if this was indeed an assassination attempt, the implications are horrendous. It gives weight to McAfee’s position in cryptocurrency and his declaration for 2020 presidential candidate.

For now, I’m wishing Mr. McAfee a full recovery.

Cheers,
A.Yasir

BITCOIN’S VALUE WAS FRAUD?

 The Coordinated Manipulation
According to research done by Professor John Griffin of Texas Finance, last years epic rise for Bitcoin was actually done by coordinated market manipulation.

Professor Griffin goes on to explain that he examined millions of transactions on cryptocurrency exchange Bitfinex, and says that “the US dollar pegged cryptocurrency Tether was used to buy Bitcoin at the times that the latter was falling- which helped ‘stabilize and manipulate’ the price”

First I’ll explain what Griffin’s said, and then I’ll explain why he’s wrong about Bitcoin but right about Tether. And it boils down to his understanding of how Exchanges work and how Bitcoin works.

Griffin said “Fraud and manipulation often leave footprints in the data and it’s nice to have the blockchain to track things,” Griffin told CNBC. Whenever bitcoin fell, Tether was used to buy it to prop up the price again.

“It was creating price support for bitcoin and, over the period that we examined, had huge price effects. Our research would indicate that there are sophisticated people harnessing investor interest for their benefit.”

Bitcoin started 2017 at below $1,000 and by Dec 2017 hit 20,000. But as if February to June 2018 it’s been jumping back and fourth from it’s lowest at $6k to the highest $10k (which didn’t even last)  Tether is the 11th largest cryptocurrency and is pegged to the US dollar. Some critics say Tether owners don’t have enough fiat currency to back its $2.5 billion market capitalization.

Bitfinex CEO J.L. van der Velde told CNBC that neither the exchange nor tether helped to boost bitcoin prices. “Bitfinex nor tether is, or has ever, engaged in any sort of market or price manipulation. Tether issuances cannot be used to prop up the price of bitcoin or any other coin/token on Bitfinex,”

Now here’s what I think:

I’ve personally used Tether but I do worry about it. A lot of people have accused Tether of fraud, and Tether certainly hasn’t proven the naysayers.  Do they have the 2.5 billion USD and how are they raising funds?  Essentially as far as I can see, Tether is a non-backed, way of essentially printing virtual USD.  I think Griffin is way off on this one.  USDT (Tether) is a convenient trading pair that can be used with some of the top cryptocurrencies to trade and exchange directly for other coins.

The issue is that a lot of people don’t realize most tokens and currencies are not directly convertible or tradeable for others on exchanges.  Generally you’ll have to sell your ABC alt-coin or tokens for Bitcoin, or USDT and then use the major currency you sold or exchanged to buy say another coin such as Ripple, Litecoin, Lisk etc..  So this is where USDT comes in, if Griffin thinks it propped up Bitcoin I think he is misunderstanding how the exchanges work.  Yes a lot of people are using USDT to buy other currencies but is USDT a market factor?  No, I don’t think so, it’s just simply convenient and I agree with Bitfinex that it doesn’t appear they are using it to prop up Bitcoin.

However, USDT could not be used in such a way if it wasn’t given prominence and primary trading pairs like Bitfinex and other major exchanges have used.  Could some of the exchanges be in cahoots with currencies like USDT and others?  Absolutely, and this is the more likely scenario of market manipulation in the sense that they essentially largely control which currencies fail and flourish.

Any coin that is used as a primary trading pair or in other words directly convertible has more value and will intrinsically be used more as a vehicle to buy coins like Bitcoin.

I think Griffin just raises the simple question about USDT being a fraud and this is the biggest concern but I highly doubt USDT’s existence or trading patterns are responsible for Bitcoin fluctuations directly.  He may derive this from trading patterns but I really just think USDT is a convenient and easy to understand intermediary trading pair vs how you wrap your mind around how many BTC another coin like Ripple, Ethereum or Litcoin is worth etc…

What do you think?

Cheers!
-A. Yasir