Four individuals from Toledo, OH are facing federal charges that include possessing document-making equipment and falsifying identification documents. The four are accused of operating a massive fake ID operation dating as far back as 2013, with black market sales to the tune of $5.6 million in Bitcoin that investigators electronically seized. Also seized were computer and printing equipment, gold and silver bars, and a stash of cash.
The scheme ran primarily through Reddit, investigators say, where those interested in procuring fake identification documentation had to follow a number of steps to hide transactions, which included purchasing Bitcoin.
Prosecutors from the US government have requested the 500 seized Bitcoin from this case be confiscated, allowing the government to add them to an existing pool of seized Bitcoin that are likely to be auctioned off to the public.
It is not uncommon for the US government to auction off seized goods, including cryptocurrency. This past January, the US Marshals Service auctioned off more than 3,800 Bitcoin. In 2014, the US Marshals Service auctioned off Slik Road founder Ross Ulbricht’s 50,000 Bitcoin after he was convicted of seven different charges ranging from narcotics to money laundering.
Criminals have been increasingly moving away from Bitcoin and into privacy coins like Monero, as investigators have begun advancing their ability to trace Bitcoin. In recent weeks, public figures such as Bill Gates have spoken out about cryptocurrency and its ties to the criminal world. As governments take more notice of cryptocurrencies and begin the regulation process, privacy coins are likely to come under additional scrutiny.