Darknet Vendor and Pharmacist Charged With $270 Million Bitcoin Drug Trade

A federal grand jury in the District of Columbia has charged two Costa Rican residents for illegally selling opioids on the darknet. 

Originally from the United States, David Brian Pate is a darknet vendor who along with Costa Rican pharmacist Jose Luis Hou sold drugs worth 23,903 Bitcoin (BTC) — approximately $270 million — to darknet customers.

The jury charged Pate and Hou for conspiring to distribute controlled substances, distributing controlled substances, conspiring to import these substances and conspiring to launder money and money instruments. 

Selling drugs on SilkRoad and AlphaBay

According to the statement published by the Department of Justice, Pate illegally purchased narcotics such as OxyContin and morphine pills from the Costa Rican pharmacist Fung and laundered payments to him.

Pate advertised his drugs using numerous online handles, claiming he was selling the “old formula” of the OxyContin that could be crushed and inhaled or injected. The new version of the drug is tamper-resistant and cannot be crushed.

He sold the drugs on various darknet markets including the famous SilkRoad and Alphabay in exchange for Bitcoin payments. 

To deliver his drugs to the customers, Pate sent bulk shipments from Costa Rica along with a list of customers and their order details to his partner re-shippers in the U.S. The re-shippers then created smaller packages and mailed them to customers.

Upon every delivery, the marketplace released the Bitcoin payment from the escrow wallet to Pate’s Bitcoin wallet.

Speaking on the matter, the Acting U.S. Attorney Michael Sherwin said, “These charges are a warning to drug traffickers worldwide that neither the shroud of the darknet nor of virtual currency can hide their illegal activities from the vigilance of U.S. law enforcement.”

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