Crypto Used in Alleged $5.4M Drug Conspiracy Case

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Cryptocurrency including Bitcoin was allegedly used to launder more than $5.35 million for a drug trafficking organization in a conspiracy that included the reported distribution of counterfeit pharmaceutical pills and other controlled substances.

John Khuu, 27, from San Francisco, California, was indicted on charges of money laundering conspiracy by a federal grand jury, the Department of Justice said in a release on Friday (Oct. 7). The indictment handed down by US Magistrate Judge John D. Love alleged that Khuu and others conspired to launder drug trafficking proceeds through cryptocurrency.

Using the dark web as a marketing portal, Khuu is accused of distributing fake prescription pills and other controlled substances to people nationwide, per the statement.

See also: EU Targets NFT Money Laundering; Warner Music Group Plays Along

Customers generally paid for their purchases using Bitcoin or other cryptos, making transfers from their dark web market customer accounts to one of Khuus vendor accounts, according to the allegations.

Khuu and his co-conspirators traded the Bitcoin for US currency and laundered the proceeds through hundreds of transactions and dozens of financial accounts, according to the DOJ statement.

Read more: UK Bill Will Make It Easier to Sixteen Crypto in Money Laundering Cases

Khuu was indicted on May 18 by a federal grand jury in Texas on charges of conspiracy to commit money laundering.

He was also convicted by a federal grand jury in the Northern District of California on Aug. 17 on two counts of unlawful possession of a controlled substance. On Aug. 19, he was arrested on warrants in California.

Related: US Takes Indirect Aim at Anonymity-Focused Crypto Coins

If convicted on all counts, Khuu faces up to 20 years in federal prison on each charge.

This effort is part of an Organized Crime Drug Enforcement Task Forces (OECDTF) operation, according to the release.

New PYMNTS Study: How Consumers Use Digital BanksA PYMNTS survey of 2,124 US consumers shows that while two-thirds of consumers have used FinTechs for some aspect of banking services, just 9.3% call them their primary bank.

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