A Florida man admitted using “sophisticated online techniques” to conceal more than $1 million in cryptocurrency from the IRS. Ethan Thomas Trainor pleaded guilty to attempted tax evasion. According to information revealed in court and a proffer statement, Trainor sold hacked online accounts on darkweb markets in exchange for cryptocurrency. He used mixers in an attempt to obscure the source of the funds. Trainor then underreported his earnings to the IRS by filing tax returns that underrepresented his earnings. For example, according to a criminal information, Trainor filed a tax return in 2015 that was short by $181,933. As a result, the filing resulted in a “loss” to the federal government of $40,846. The underreported amounts Trainor admitted that he filed similar tax returns multiple times, resulting in a total “loss” to the federal government of $238,894. From the proffer statement: “Ethan TRAINOR bought and sold hacked online account login (usemames and passwonis) for movie streaming websites such as Netflix, pornography websites, Spotify, Major Sports websites, laming websites, and Uber accounts through various dark net markets. TRAINOR illegally obtained these usemames and passwords using various methods, from hacking the accounts himself to buying the hacked usernames and passwords. These darknet markets that TRAINOR operated on are specifically designed to facilitate illegal commerce and provide anonymity through user concealment and by employing numerous financial obfuscation techniques. Agents were able to successfully trace the virtual flow of cryptocurrency proceeds from TRAINOR’s sales on various blockchains to numerous mixing and cash-out services.” Very serious IRS-CI agents in training There is virtually no information on how investigators tracked Trainor’s activities. Perhaps they flagged him for tax evasion and worked backward from there. He faces up to five years in prison and is scheduled to be sentenced in December. Non-Payment of Federal Income Tax on Cryptocurrency Earnings Leads to Conviction for South Florida Resident | www.justice.gov, archive.is, archive.org Statement The last thing you see (via darknetlive.com at https://darknetlive.com/post/florida-man-convicted-of-attempted-tax-evasion/)

A member of the “EastSideHigh” darkweb drug trafficking organization was sentenced to 28 months in prison. Allante Pires, 25, pleaded guilty to conspiracy to manufacture, distribute and possess with intent to distribute MDMA, Ketamine, and Alprazolam. Pires, along with co-conspirators Binh Thanh Le and Steven McCall, sold drugs through the darkweb under the username “EastSideHigh.” Pires, Le, and McCall U.S. Senior District Court Judge Rya W. Zobel sentenced Pires to 28 months in prison and three years of supervised release. As part of the investigation into the vendor, undercover Homeland Security Investigations (HSI) agents posed as money launderers and arranged a meeting with the defendants. From a previous Darknetlive article: “In March 2019, Inspector Gentiluomo and another postal inspector (UC) met with Le at a hotel. The parties agreed to exchange $200,000 in Bitcoin in a wired hotel room. After Le had sent the Bitcoin to the address provided by the feds, the second postal inspector pretended to be having problems with his cellphone. He asked Le to open the wallet application on his phone and verify that the transaction had been completed. Le handed his unlocked phone to the postal inspector. After the postal inspector had possession of Le’s phone, postal inspectors and state police entered the room and detained Le.” “After being advised of his rights per Miranda, Le voluntarily provided law enforcement officers with his password.” “After detaining Le, other officers approached Pires’ Mercedes, which was still in the hotel’s parking lot. They detained Pires and asked him about the keys on his key ring. Pires identified one as the key to the office space in Stoughton. Other law enforcement officers executed a search warrant at the office space where they encountered McCall wearing a respirator.” EastSideHigh on Wallstreet Market Le pleaded guilty to conspiracy to manufacture, distribute and possess with intent to distribute MDMA, Ketamine, and Alprazolam. On March 10, 2022, a judge sentenced Le to eight years in prison and three years of supervised release. The judge ordered Le to forfeit more than 59 Bitcoin, $114,680 in cash, the proceeds from a 2018 BMW M3 sale, a pill press, and a currency counter. McCall has a sentencing hearing scheduled for September 28, 2022. In addition to the investigative techniques described above and in previous darknetlive articles about the case, the feds used evidence from a music video to build their case. In the criminal complaint, Inspector Gentiluomo points to the existence of a “music” video on YouTube titled “MTS - ALL FOR THE GANG.” The video, uploaded by MTS Entertainment on January 3, 2019, contains “various individuals of interest to law enforcement.” Gentiluomo learned about the video on January 11, 2019. Part of the video was filmed at the office space in Stoughton. A pill press is visible in the background of the scenes filmed in the office space. The postal inspector wrote that the bag beside the pill press contained powder. Pill press Complaint pdf Indictment pdf (via darknetlive.com at https://darknetlive.com/post/third-east-side-high-defendant-sentenced-to-prison/)

Cryptocurrency mixer use has reached an all-time high in 2022, according to a report from the blockchain analysis firm Chainalysis. Mixers may soon become obsolete as Chainalysis continues to refine the ability to demix certain mixing transactions and see users’ original source of funds. Chainalysis, a member of the World Economic Forum’s (WEF) Global Innovators community, is a leader in the blockchain analytics industry. The company is an extension of governments, providing services to law enforcement agencies and hiring former feds and FinCEN employees. Mixers are receiving record amounts of cryptocurrency in 2022, according to a Chainalysis report published on July 14, 2022. On April 19, 2022, mixers received “an all-time high of $51.8 million worth of cryptocurrency.” A chart provided by Chainalysis reveals that mixers received roughly $24 million worth of cryptocurrency on the same day in 2021. “Are Mixers Compliant?” In the report, Chainalysis laments that mixers are legal “despite their utility for criminals.” FinCEN, the Financial Crimes Enforcement Network, clarified in 2020 that cryptocurrency mixers are considered money transmitters under the Bank Secrecy Act (BSA) and must comply with the same regulations as other money transmitters. These regulations include maintaining an anti-money laundering compliance program and following “Know Your Customer” (KYC) rules for Money Services Businesses (MSBs). “Given that increased privacy is the whole point of using a mixer, it seems unlikely that one could implement those compliance procedures and retain its user base. “ Types of Transactions So far, in 2022, 23% of funds sent to mixers came from a cryptocurrency address associated with illicit activity. Illicit transactions accounted for just 12% of mixer activity in 2021. Chainalysis tracked several categories of illicit activity. Terrorism financing Stolen Funds Scam Sanctions Ransomware Cybercriminal administrator Fraud shop Darknet market Child sex abuse material “What stands out most is the huge volume of funds moving to mixers from addresses associated with sanctioned entities, especially in Q2 2022.” In April 2022 (Q2), the U.S. Treasury’s Office of Foreign Assets Control (OFAC) sanctioned Hydra Market. Transactions from addresses linked to Hydra Market accounted for 50.4% of all funds moving to mixers from sanctioned entities in 2022. Lazarus Group is a hacking group purportedly connected to the Democratic People’s Republic of Korea (DPRK). In 2022, Lazarus Group hackers stole roughly $1 billion in cryptocurrency from DeFi projects. Funds sent from addresses associated with the Lazarus Group and Blender.io accounted for nearly all of the remaining transactions in the same category. Blender.io is the first cryptocurrency mixer sanctioned by OFAC. OFAC sanctioned the mixer for allegedly processing $20.5 million in stolen cryptocurrency, some of which came from the Lazarus Group. “Balancing privacy with safety.” Chainalysis, which is a neutral source when it comes to discussions about financial privacy, believes that mixers “present a difficult question” to “members of the cryptocurrency community.” “Virtually everyone would acknowledge that financial privacy is valuable, and that in a vacuum, there’s no reason services like mixers shouldn’t be able to provide it. However, the data shows that mixers currently pose a significant money laundering risk…” Mixer Usage Reaches All-time Highs in 2022 With Nation State Actors and Cybercriminals Contributing Significant Volume | archive.is, archive.org, chainalysis.com (via darknetlive.com at https://darknetlive.com/post/chainalysis-report-about-mixer-use-increasing/)

According to Italian law enforcement, a man from the Province of Treviso attempted to hire a hitman on the darkweb to kill his romantic rival. This image was part of the police's media release The Federal Bureau of Investigation in the United States notified law enforcement agencies in Italy that someone had targeted a 45-year-old man from Conegliano through a murder-for-hire site on the darkweb. Local authorities discretely alerted the intended victim of the hit. By tracing the payment, investigators with the Postal and Communications Police identified the person responsible for paying for the hit. They “tracked the movemenent of cryptocurrencies from the virtual wallet of the suspect to the administrator of the site.” The investigation resulted in the identification of a 34-year-old man from the province of Treviso as the suspect. What is the blurred website? The suspect allegedly wanted to “freely court” the intended victim’s girlfriend, with whom the suspect was “secretly in love.” By eliminating the competition, the suspect believed he would have a chance with the woman. Dread? Police referred the information to prosecutors. According to the police, the case is an example of Italian law enforcement’s “modern investigative techniques.” “The whole judicial affair is characterized by some novel aspects that deserve to be highlighted. The successful identification of a user operating on the darkweb testifies that the non-indexed part of the internet, where illicit goods and services are freely offered, hitherto considered impenetrable by the Police, is no longer so. Indeed, modern investigative techniques used by the Postal and Communications Police, particularly those for tracking cryptocurrency payments, make it possible, as in this case, to trace cryptocurrency wallet holders.” LA POLIZIA DI STATO IDENTIFICA IL MANDANTE DI UN OMICIDIO SUL DARKWEB | archive.is, archive.org, commissariatodips.it (via darknetlive.com at https://darknetlive.com/post/italian-man-cited-for-hiring-hitman-on-the-darkweb/)