California Resident Charged for Laundering $5 Million in Drug Proceeds With Bitcoin

U.S. officials charged a man in California on Friday for unlawful importation of drugs and conspiracy to commit money laundering.

He allegedly sold those counterfeit drugs for Bitcoin. 

• As detailed in a press release by the Department of Justice, 27-year-old John Khuu was brought to Federal court for his charges on Thursday. 
• He allegedly serviced customers across the United States with controlled substances on dark web markets, including counterfeit pharmaceutical pills.
• Khuu and his co-conspirators would typically have his customers pay in Bitcoin, if not another cryptocurrency. That Bitcoin would then be traded for dollars, which were then laundered through “hundreds of transactions and dozens of financial accounts.”
• Some of the institutions within Khuu’s laundering network were Bank of America, JP Morgan Chase, Citibank, and Wells Fargo. Indictments said he had multiple fake accounts at those banks.
• The endeavor amassed the perpetrators over $5,350,000 in total.
• “If convicted, Khuu faces up to 20 years in federal prison on each charge,” continued the statement.
• Bitcoin critics – including former Federal Reserve Chairman Ben Bernanke – commonly deride Bitcoin’s primary use case as being for money laundering. Indeed, one of Bitcoin’s earliest areas of use was as a transactional currency for the digital black market “Silk Road” back in 2013.
• However, Bitcoin lacks privacy due to its fully transparent public ledger. As such, even though it’s technically anonymous, blockchain intelligence experts can effectively track the movement of illicit funds on-chain. This can help them identify who is moving them so that they can eventually punish the culprit.
• For example, Chainalysis helped authorities seize $30 million stolen in the $600 million DeFi hack against Axie Infinity in March. 

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Khuu was arrested on both charges on August 19th at a residence in Garden Grove, CA.