A Maryland federal court has accused a dark web drug dealer known as Xanaxman of laundering $137 million worth of Bitcoin from prison.
While in prison, the drug dealer, who has been in custody since 2018, has allegedly laundered 2,933 Bitcoins.
Farace, aka Xanaxman, was previously jailed for selling Alprazolam on the dark web.
Farace was ordered by a court in November 2018 to forfeit the 4,000 Bitcoins he earned from selling drugs.
At the time, 1,688 Bitcoins were worth $16,800, but today they are worth $187 million. Furthermore, he was ordered to turn over property and cash worth $5.6 million.
According to the federal indictment unsealed on Wednesday, Farace continued money laundering while serving a 57-month prison sentence.
During the indictment period, Farace allegedly laundered drug proceeds with the help of his father, Joseph Farace.
A group of 59 Bitcoin was seized by the Drug Enforcement Administration in May in connection with these allegations. Those Bitcoins are worth over $137 million today.
It is unclear whether the government learned of Bitcoin holdings that the indictment mentioned during the trial or if they were Bitcoins acquired while he was behind bars.
Obtaining reliable information about the dark web and cryptography on it is challenging. An attempt by blockchain analytics firm, Chainalysis, to estimate the amount of crypto being sent to dark web markets in 2019 resulted in an estimate of over $800 million.
Dark web marketplace, Silk Road, popular for purchasing drugs illegally, was shut down by the FBI in 2013 due to FBI surveillance. At the time, the FBI collected 173,991 Bitcoin (worth $33.6 million); there are still 444,000 Bitcoins missing. According to blockchain analytics firm Elliptic, 70,000 Bitcoin mysteriously moved in November 2020.
