Washington, D.C.: Building the IRS Win McNamee/Getty
To trick a dark-web drug dealer, an undercover IRS agent disguised himself as a crypto trader and demanded $180,000.
The agent posted a listing in June offering to buy bitcoin. It attracted a bid from "Lucifallen21," who was later arrested.
The privacy-centric nature of cryptocurrency has raised concerns that they could be used for criminal activity.
Subscribe to our daily newsletter 10 Things Before The Opening Bell.
Forbes reports that an undercover IRS agent disguised himself as a crypto trader in order to con a dark-web dealer into paying $180,000 to the agency.
The IRS agent who assumed the name "Mr. Coins" earned a reputation on the crypto-for-dollars trading website LocalCryptos. In June, Mr. Coins posted a listing offering bitcoin for a premium in cash via mail. It soon attracted a bid from "Lucifallen21."
Lucifallen21 was actually Chase Hite from Indiana. Hite was detained in July while awaiting trial.
Hite and Mr. Coins began a relationship. Hite purchased thousands of dollars worth of bitcoin and monero for cash. Hite also boxed clothing-wrapped bills and mailed them to Mr. Coins. Hite later revealed that he was involved with trafficking in "pills, opioids, and cocaine on the dark internet," according to Forbes court filings.
Hite was confirmed by IRS agents when they asked the Postal Service for a purposely lost cash shipment to be marked as such. Hite fell for the trap and called the post office with an address that was linked to his name. His fingerprints were also extracted from the packages by forensic analysis.
Monero and Zcash, privacy-centric cryptocurrency options, have raised concerns about criminals using their identity-hiding features for money laundering or trafficking illicit substances. Analysts say that crypto is still the most popular method of illegal activity.