Silk Road Seller, Hugh Haney, Being Charged with Major Money Laundering Charges.
Announced on November 6 (justice.gov), an Ohio man by the name of Hugh Haney pled guilty to charges of money laundering.
Law enforcement officials originally arrested him in July of 2019, and he has since been in police custody.
The 61 year had previously sold illegal narcotics on the dark web through the infamous Silk Road marketplace. Haney was reportedly a ‘high-ranking member’ of a Silk Road vendor named ‘Pharmville’. Total earnings from these sales added up to over $19 million in bitcoin.
The US government shut down Silk Road in 2013. However in 2018, Haney tried to cash out his Pharmville earnings. He claimed he had earned the bitcoin the traditional way of ‘mining’ and ‘trading’. However, law enforcement had information proving otherwise.
A U.S. Attorney working on the case, Geoffrey S. Berman, stated, “as alleged, Hugh Haney used Silk Road as a means to sell drugs to people all over the world. Then he allegedly laundered his profits – more than $19 million – through cryptocurrency”.
Hugh Brian Haney is due to be sentenced in February of 2020. Until then he remains in police custody.
About ‘Silk Road’
Founded by Ross Ulbricht in 2011, Silk Road was an online black marketplace only accessible on the dark web. Goods and services sold on the marketplace were often illegal. These included illegal drugs, chemicals, weapons, fake identities, forged documents, and hacking software.
According to Justice Department reports, Silk Road had earned nearly $1.2 billion in revenue over the two and a half years it was active. It also reportedly generated $80 million in commissions for operators.
In 2013, the FBI seized the website and arrested Ulbricht. Ulbricht was eventually sentenced to life in prison without parole. The federal government charged him with money laundering, narcotics trafficking, and computer hacking.
The Case Against Hugh Brian Haney
Haney was one of the sellers who used Silk Road to sell his goods. He sold them under his vendor name “Pharmville”. According to FBI reports, “the operators of Pharmville supplied a dedicated community of individuals who often traded illicit narcotics”.
The FBI monitored Haney from November 2011 to February 2012. During this time they discovered he was selling “illegal narcotics including OxyContin, ketamine and fentanyl.”
Law enforcement officers found further evidence of Haney’s involvement after a search warrant allowed them to search his home and computer. They found several incriminating documents, including a to do list mentioning Pharmville, Silk Road, and narcotics trafficking.
His earnings from these transactions added up to over 19 million dollars worth of bitcoin.
Haney ran into further trouble when in February of 2018, he tried to exchange his $19 million of bitcoin into cash. He then falsely claimed to a bitcoin exchange company that the money was earned legally through standard ‘mining and trading’ of bitcoin.
However, the bitcoins were instead earned through his illegal drug sales via Silk Road.
FBI agents and investigators working on the case used ‘blockchain analytics’ to uncover Haney’s illegal online activities.
Sentencing
Since July 18 of 2019, Hugh Brian Haney has been arrested and is in federal custody.
He has since pled guilty to one count of “concealment money laundering”. He has also pleaded guilty to a count of “engaging in a financial transaction in criminally derived property”.
According to the Justice Department, the money laundering charge carries a 20 year maximum prison sentence. The other charge of engaging in a financial transaction in criminally derived property carries with it a maximum sentence of 10 years.
On February 12 of 2020, Haney will face his sentencing hearing. US District Judge Jed S. Rakoff will preside over this hearing.
