U.S. authorities have formally charged the alleged moderators of DeepDotWeb, the dark web comparison and news site seized by the feds, with money laundering, taking illegal kickbacks and other crimes.
Police arrested the two Israeli citizens – Tal Prihar, 37, and Michael Phan, 34 — on Monday. Prihar, who lived in Brazil, was taken in France while police arrested Phan in Israel. TechCrunch posted the just-unsealed U.S. indictment Wednesday.
The authorities are calling DeepDotWeb’s affiliate system a “kickback” scheme, suggesting that the pair received cash for giving dark web exchanges more business. The two also allegedly used bitcoin to hide their tracks, and the indictment’s section on asset forfeiture says they had accounts at crypto exchanges OKCoin and Kraken and payment processor BitPay.
Prosecutors allege that the pair made 8,155 bitcoins in total over a period of years from this activity and estimate their total haul at $15.4 million.
“To conceal and disguise the nature and source of the illegal proceeds, totaling over $15 million, Prihar and Phan transferred their illegal kickback payments from their DDW bitcoin wallet to other bitcoin accounts and to bank accounts they controlled in the names of shell companies,” wrote prosecutors.
The indictment said Prihar and Phan made about 8,155 bitcoins in total — almost half of which was collected from the dark market known as AlphaBay. Prosecutors said at its peak, the bitcoins were worth more than $15.4 million.
“This is the single most significant law enforcement disruption of the dark net to date,” said Scott Brady, U.S. attorney for Western Philadelphia, in a press conference.
Notably, Prihar allegedly moved to Brazil, which has constitutional protection against extradition, though not for naturalized citizens. In any event, an alleged DeepDotWeb moderator wrote, “instead of arresting Prihar in Brazil, authorities arranged for his arrest in France where Prihar would land for a connecting flight between Israel and Brazil.”
Further, Brazilian authorities allegedly found $200,000 in cash and “an undisclosed amount of various cryptocurrencies, including bitcoin.” The form those currencies took is unclear. They also arrested another suspect in Brazil.
Em ações simultâneas, enquanto o investigado era preso em #Paris, na #França, buscas eram realizadas em sua casa, em Brasília. Na busca foram apreendidos dispositivos utilizados para a guarda de criptomoedas e R$ 200 mil em espécie (moeda estrangeira e reais). pic.twitter.com/hNMXM40SaQ
— Polícia Federal (@policiafederal) May 7, 2019
Deep Dot Web Indictment by John Biggs on Scribd
Image of police approaching Prihar’s home in Brazil via Medium
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