According to a criminal complaint unsealed on July 18 2019, Hugh Brian Haney sold oxycodone and other substances on the Silk Road marketplace in 2011 and 2012. In the time when Haney attempted to cash out $19 million in Bitcoin through an exchange, the exchange had frozen his account. The Drug Enforcement Administration (DEA) has investigated and identified the Silk Road as the source of Haney’s Bitcoin. According to the United States Attorney for the Southern District of New York, Geoffrey S. Berman, Hugh Haney used Silk Road as a means to sell drugs to people from all over the world. Then he allegedly laundered his profits (more than $19 million) through the Bitcoin and Bitcoin cash (BCH). The exchange of his ~$19 million in Cryptocurrency ultimately led to the suspected dark web vendor’s arrest recently. Law enforcement has arrested Haney in Columbus, Ohio, on July 18. He was presented before a magistrate judge in the Southern District of Ohio and charged with one count of concealment money laundering and one count of engaging in a financial transaction in a criminally derived property.
The law enforcement specifically the agents of the Drug Enforcement Administration had been investigating the pseudonym Pharmville since 2011 and 2012. The Law Enforcement reportedly took no further action in the investigation into the pseudonym Pharmville until late 2018 when a massive transaction at a Cryptocurrency exchange alerted exchange staff who alerted the federal law enforcement.
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The exchange, identified only as “Company-1,” required the users to provide personal information upon registration of an account on the exchange platform. As one of the exchange’s customers revealed, Haney had provided the company with his name, social security number, email address, residential address, and photo ID. The exchange froze Haney’s account on May 30th 2019 after Haney had transferred approximately 1,571.5 Bitcoins and approximately 1,572.7 Bitcoin Cash (BCH) to the exchange. He has exchanged the Cryptocurrency for a total of $19,147,057.3. The accused sent the Bitcoin and Bitcoin Cash to the exchange between January 26 and February 1, 2018. The exchange had asked where Haney had acquired such an unbelievable number of Bitcoin. Haney responded that he had earned the Bitcoin through an initial investment of $10,000 and by mining the same. They disagreed on the matter and hence froze the account. Law enforcement then learned of the suspicious transaction and launched an investigation into the source of the funds that led to the conviction.
It was after a federal judge signed a search warrant that authorized federal agents to seize Haney’s account at the Cryptocurrency exchange, an Internal Revenue Service, Criminal Investigation (IRS-CI) Special Agent and a Homeland Security Investigations (HSI) Special Agent used blockchain analysis software to determine the origin of the funds the accused had sent to the exchange account. The IRS-CI Special Agent wrote that from in or about late November 2011 through early February 2012, Hugh Brian Haney, the defendant, received at least approximately 3,892.9 Bitcoin directly or indirectly from Silk Road, of which approximately 1,392.9 remained in the Wallet of the accused at the end of January 2012.
In December last year, a federal judge signed a warrant that authorizes the search of Haney’s residence–the one on file with the exchange Haney had used to cash out his Bitcoin from Silk Road. Whilst in the search, the law enforcement found and imaged a laptop that contained, among other things, word documents, some of which referred to the Pharmville community from the Silk Road. An arrest warrant was filed on July 17, 2019, and the law enforcement had executed the warrant on July 18, 2019. Haney currently is in the custody of the United States Marshals Service while awaiting his next court appearance.
Concealment money laundering carries a statutory maximum prison sentence of 20 years and engaging in a financial transaction in criminally derived property carries a similar maximum sentence of 10 years behind the bars. Haney was also arrested in 2006 for possession with intent to distribute oxycodone and distribution of oxycodone pills.
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