New York’s First Bitcoin Money Laundering Case Pins Ringleaders Using Crypto in Drug Trade Operation
Callaway Crain and Mark Sanchez pleaded guilty to running a steroid and controlled substance business which laundered millions of dollars online through Bitcoin and Western Union payments. Manhattan District Attorney Cyrus R. Vance, Jr. announced the guilty pleas on April 23.
The defendants made over $2.8 million between 2013 and 2018 from the shipment of 10,000 packages of steroids and other controlled substances. They received payments in Bitcoin, the world’s most popular cryptocurrency, and through Western Union, a leader in cross-border, cross-currency money movement.
According to a press release by the Manhattan District Attorney’s Office,
“The defendants laundered through one or more intermediary cryptocurrency ‘wallets’ in order to obscure the source of the funds. The defendants then converted the bitcoin into U.S. currency using a cryptocurrency exchange service, before depositing the cash into their bank accounts. Customers also made payments through Western Union. Those payments were laundered through the use of false identities, or through international wire transfers from foreign based receivers.”
Crain and Sanchez sold anabolic steroids and other substances through several websites that they operated. The substances were acquired from China and sold to customers across all 50 American states.
“Crain and Sanchez operated and managed a series of websites named ‘NextDayGear’ that sold anabolic steroids, such as testosterone, nandrolone, and stanozolol, as well as controlled substances and pharmaceuticals that can be used to counteract the negative effects of steroid use, including Xanax, Valium, and Viagra. “
“Their customers included a college football player, an NFL football player, a professional volleyball player, fitness trainers, police officers, members of the armed services deployed overseas, body builders, drug dealers, doctors, lawyers, and a high school athletic coach.”
District Attorney Vance says his office has the skills and resources to follow the money.
The conviction marks a first for the state of New York.
“This was the first conviction for money laundering involving cryptocurrency by New York State prosecutors. Last week, the Office indicted a dark web operation that sold and shipped hundreds of thousands of counterfeit Xanax tablets and other controlled substances, and laundered $2.3 million in cryptocurrency by using preloaded debit cards and withdrawing cash at ATMs in Manhattan and New Jersey.”
Earlier this month, Robert Mueller, former Director of the Federal Bureau of Investigation (FBI), released his report on “The Investigation into Russian Interference in the 2016 Presidential Election”, which details, among numerous maneuvers, how Bitcoin was used by Russian military intelligence to obscure its involvement.