Police in Europe are currently taking massive action against criminal activities on the Darknet. Thanks to the nice Bitcoin prices, this should often flush decent money into the state coffers – if you have the password for the wallets.
Sometimes crime pays – for the governments that fight it
For example, when a drug dealer sells drugs worth tens of thousands of euros in exchange for Bitcoin, hoards the coins until they are worth a hundred times as much, and the police finally confiscate them after finding out who the dealer is. Since the Bitcoins were criminally acquired, they belong to the state, which then sells them.
Unfortunately, the latest press release does not reveal to what extent Europol has seized Bitcoins as part of the latest crackdown on organized crime on the web. Investigators from the European police agency arrested eight criminals on Tuesday to charge them with sim-swapping. The gang gained access to the phone numbers of thousands of victims over the past year, including numerous U.S. influencers, sports stars, musicians and other celebrities, and stole more than $100 million in cryptocurrencies from them, according to Europol’s knowledge.
Sim swapping means that a criminal takes control of a phone number
To do this, he manipulates the mobile operator – through lies or insiders – so that it disables the original SIM and forwards access to the phone number to the criminal’s SIM. Once he now has access to incoming SMS from the victim, he gains access to the victim’s accounts protected by 2-factor authentication. For example, crypto exchanges or crypto wallets. Such sim swaps were a big topic after the Ledger hack, which affected hundreds of thousands of crypto users, certainly including numerous celebrities. However, it is not clear from the press release whether there is a connection here.
Also in the latest strike of the public prosecutor’s office in Koblenz against a darknet drug dealer, it is not known whether and in what amount Bitcoins were confiscated in the process. After customs investigators discovered more than 180 mail items containing drugs at mail centers in Frankfurt and Giessen, police tracked down a gang of drug traffickers who bought amphetamine, ecstasy and other drugs in the Netherlands and sold them via a darknet marketplace on the Internet. During a raid in Rhineland-Palatinate, Bavaria and North Rhine-Westphalia, police seized drugs worth around 250,000 euros as well as the suspects’ computers – on which they are likely to discover wallets.
In the fight against drug trafficking from the Darknet, the Koblenz State Cybercrime Center now seems to be taking a leading role. It made headlines as recently as January when an international team under its direction shut down the “DarkMarket,” at its time one of the largest, if not the largest, marketplace on the Darknet. In the process, an Australian was arrested as the suspected administrator on the German-Danish border. The police press release does reveal that around 140 million euros worth of drugs were traded in Bitcoin and Monero on the marketplace. However, whether the police had also seized cryptocurrencies again remains in the dark. Depending on the duration of the operation, the trading fees collected could have increased significantly in value in the meantime.
- In Herford, Westphalia, on the other hand, the court case began yesterday against three drug dealers who had distributed a wide variety of drugs, from hashish to heroin, via their own online store and darknet markets.
- The dealers had also procured the drugs in the Netherlands, the revenues of a total of slightly more than 500,000 euros they achieved mainly in bitcoins.
- But in this case, too, the reports are silent as to whether the public prosecutor’s office seized cryptocurrencies.
- The police in Gothenburg, Sweden, are no less tight-lipped, having recently convicted a gang that had been dealing in cocaine. Some of the drugs were sold on the street, others via the darknet throughout the country.
- But again, it remains unknown whether Bitcoins were confiscated.
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What is interesting about all the cases is how everything is connected
The Koblenz police were able to track down the drug dealers because they had information from the strike against the DarkMarket, where the dealers had been trading, among other things. The DarkMarket, in turn, was brought down by knowledge police had gathered when they busted the cyberbunker in 2019, also in Rhineland-Palatinate, from which important parts of the darknet were hosted. One thing leads to another. Things weren’t much different in Sweden, where it helped investigators that drug dealers had been using the encrypted messanger Encrochat, which was popular with criminals until French police cracked it last year. And in the Herford case, police tracked down the dealers in part because they had been selling drugs at the Wallstreetmarket marketplace, which the BKA shut down last year.
By contrast, the situation is clearer in Kempten. Police there arrested a 29-year-old for computer fraud back in 2014 and confiscated more than 1,800 Bitcoins in the process. The officers were able to access 86 of them. After legal technicalities forced the prosecution to hold the Bitcoins for several years, it was able to sell them in 2018 for the nevertheless decent sum of 500,000 euros. It was worth the wait. But now 1,730 Bitcoins remain in an encrypted wallet, which would be worth just under 65 million euros today – or about a quarter of the city’s projected budget for 2021. Especially after the tough Corona year of 2020, the city should be able to make good use of such assets. But without a password, the chances of this happening are not particularly good.
Now that the police and the judiciary have been dealing with cybercrime for so long, and in some cases so fruitfully, the federal government is planning to add the offense of operating a darknet marketplace to the statute book. According to the law, it will be punishable by up to 10 years’ imprisonment to operate a trading platform on the Internet “whose purpose is to enable or promote the commission of unlawful acts.” In addition to platform administrators, the law also holds hosters, such as that very infamous Cyberbunker, accountable. Anyone who knowingly provides the server infrastructure for darknet marketplaces or comparable platforms will be punished with fines of up to five years.