The U.S. Department of Justice is scrutinizing sellers on underground online marketplaces, and on Thursday said federal agents had arrested one person for alleged illegal weapons sale on underground market "Black Market Reloaded" in an elaborate sting operation.
U.S. officials shut down about a month ago the "Silk Road," an underground market which was accessible only through the Tor anonymity service and used the anonymous bitcoin virtual currency to keep the identity of sellers and buyers private. Silk Road is alleged to have been a thriving market for drugs and other illegal products and services, including fake passports. The National Crime Agency in the U.K. also arrested in October some persons suspected of selling illegal drugs on Silk Road.
On Wednesday, Silk Road was revived by a person styling himself as Dread Pirate Roberts, the handle linked to Ross William Ulbricht who is charged by the U.S. Federal Bureau of Investigation with owning and running the original Silk Road.
The government is also going after illegal sellers on the marketplaces. "Online black market sellers should take note: we aren't just targeting the administrators of these sites, which can pop up again elsewhere," Paul J. Fishman, U.S. attorney for New Jersey district, said in a statement. "If you buy or sell illegal goods on an underground marketplace, law enforcement is watching."
The shutting down of the underground markets has been criticized as being similar to trying to "whack-a-mole," as new markets can come up online as quickly as others are shut down.
Matthew Crisafi, 38, of Hampton, New Hampshire was arrested by special agents from U.S. Immigration and Customs Enforcement, Homeland Security Investigations (HSI). The owner of an independent trucking company, he was allegedly noticed by HSI agents during an investigation from April of illicit sales activity on Black Market Reloaded.
According to a complaint filed in the U.S. District Court for the District of New Jersey, a copy of which is available on the website of the Justice Department, an agent of HSI set up an account on Black Market Reloaded in April and identified a posting on a seller's profile page, later identified as Crisafi, which advertised the sale of a number of firearms, including a Smith & Wesson Model Bodyguard .380 caliber semi-automatic handgun.
After online negotiations, the undercover agent agreed to buy the gun for the equivalent of US$3,300 in bitcoin, including shipping the arm to a foreign location, and the bitcoin was put in an escrow account. Crisafi allegedly notified the agent in May that he had shipped the package via U.S. Postal Service and provided the agent with the USPS tracking number for the package, according to the complaint.
Officials seized the package containing the Smith & Wesson. The USPS tracking number on the package matched the number provided by Crisafi, who was identified by USPS staff in New Hampshire as the person who shipped the package believed to contain the Smith & Wesson to an overseas destination on May 21, the complaint said. Following the transaction, Crisafi and the agent allegedly negotiated the sale of more weapons. Crisafi accepted payment through both Western Union and bitcoin for the firearms, according to the complaint.
Crisafi has been charged on three counts, including the alleged "unlicensed sale of firearms; smuggling of firearms from the United States to an overseas destination; and conspiring to commit money laundering in connection with firearms trafficking activities."
Bitcoin, suspected of being used by criminals because of the anonymity it offers, has also come under scrutiny by regulators in some countries. The currency is, however, at the same time, being recognized by a number of businesses and agencies. The U.S. Federal Election Commission in a draft advisory, made available for comment on Thursday, is recommending that bitcoins can be accepted as in-kind campaign contributions, though disallowing disbursements through bitcoins from a bitcoin wallet.
"Thus, because Bitcoins are neither the currency of any country nor negotiable instruments, Bitcoins are not 'money' under commission regulations," according to the advisory in response to the Conservative Action Fund, a non-connected political committee.
Tom Carper, U.S. Senator for Delaware and chairman of the Homeland Security and Governmental Affairs Committee, said, in reference to a report in Politico, that the FEC proposal underscores what his committee, which is looking into the use of virtual currencies, has recognized for some time: that virtual currencies are not going away, and can potentially have far-reaching implications for the U.S. federal government and society as a whole.