In brief
- Maryland’s “Xanaxman” had to forfeit 4,000 Bitcoin in November 2018. That would be worth $187.2 million today.
- But he allegedly continued his Bitcoin dealings while in prison.
- He is now indicted for laundering 2,933 Bitcoin, worth $137 million.
A dark web drug dealer from Maryland known as Xanaxman is accused by a Maryland federal court of laundering $137 million worth of Bitcoin from prison.
Xanaxman, real name Ryan Farace, was imprisoned three years ago for selling Alprazolam, a form of strong anxiety drug Xanax, on dark web markets.
In November 2018, the court ordered Farace to forfeit 4,000 Bitcoin earned from selling drugs. That much Bitcoin was worth $16 million then but would be worth $187.2 million today. He was also ordered to hand in $5.6 million in cash and property.
But Farace continued money laundering while serving a 57-month prison sentence, according to the federal indictment, which the court unsealed on Wednesday.
The indictment alleges that Farace, aided by his father Joseph Farace, laundered drug proceeds between October 2019 and April 2021.
In connection with these allegations, the Drug Enforcement Administration seized 2,875 Bitcoin in February and another batch of 59 Bitcoin in May. Today, that Bitcoin would be worth $137 million.
While the indictment refers to proceeds derived from drug dealings, it isn’t clear whether these were Bitcoin holdings the government hadn’t previously known about or Bitcoin he somehow acquired while in prison.
Dark web and crypto
Reliable data about the dark web, let alone the use of crypto on the dark web, is difficult to obtain. In one attempt, blockchain analytics firm Chainalysis estimated that over $800 million in cryptocurrencies was sent to dark web markets in 2019.
The Silk Road, a marketplace popular for buying illicit drugs on the dark web, was forced to shut down by the FBI in 2013. The agency seized 173,991 Bitcoin (worth $33.6 million at the time), but there’s still 444,000 Bitcoin missing; 70,000 Bitcoin that mysteriously moved in November 2020, was part of that batch, according to blockchain analytics firm Elliptic.
The US government auctions seized Bitcoin, often at a premium. In 2014, venture capitalist Tim Draper acquired 30,000 Bitcoin confiscated from the Silk Road at an undisclosed price.
Farace’s Bitcoin has yet to hit the market.