A 61-year-old man from Columbus, Ohio, was sentenced to 42 months in prison for laundering the proceeds of his darkweb drug trafficking operation.
According to court records, Hugh Brian Haney sold a variety of drugs worldwide through the “Pharmville” vendor account on Silk Road in 2011 and 2012. In 2018 Haney attempted to cash out $19 million in bitcoin through an undisclosed exchange and in the process triggered a series of events that led to his arrest.
You can read the previous article about Pharmville here: Silk Road Vendor “Pharmville” Charged for Laundering $19 Million in Bitcoin
Haney started withdrawing his funds in November 2017 after he had opened an account at a cryptocurrency exchange. When opening the account Haney gave the exchange his name, social security number, residential address, photo ID, and verified his email address.
Between January 26 and February 1, 2018, Haney transferred a total of approximately 1,571.5 Bitcoins and approximately 1,572.7 Bitcoin Cash to the exchange. He later exchanged the cryptocurrency for a total of $19,147,057. The exchange asked Haney to explain how he had acquired the cryptocurrency. In a series of messages, Haney told the exchange that he had acquired the bitcoins from his mining activities and an initial investment of $10,000.
Unsatisfied by Haney’s explanation the exchange froze his account on May 30 and launched an internal investigation. The exchange also reported the case to federal authorities. On November 9, a United States Magistrate Judge issued a warrant that led the seizure of Haney’s funds in the cryptocurrency exchange. The agents also seized the more than $19 million from a custodial account at an undisclosed bank.
After tracing Haney’s bitcoins to their source and analyzing Silk Road’s Server Information the federal agents determined that Haney had received at least 3,892.9 Bitcoins directly or indirectly from Silk Road. Of the total received, Haney retained 1,392.9 in his wallet to the end of January 2012.
On December 9, a United States Magistrate Judge signed a search warrant for Haney’s residence. During execution of the search warrant, federal agents seized several electronic devices including a Apple laptop. On the laptop, forensic investigators found ‘numerous’ files including word documents, that referred to the “Pharmville community from Silk Road.”
On July 17, 2019, an arrest warrant against Haney was issued. Federal agents made the arrest July 18. On November 6, Haney pleaded guilty to one count of money laundering and one count of engaging in a financial transaction in criminally derived property.
In addition to the 3 and a half years in prison, United States District Judge Jed S. Rakoff sentenced Haney to three years of supervised release and ordered him to forfeit approximately $19 million and pay a fine of $10,000.