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Last week, the United States Attorney’s Office for the Eastern District of Michigan announced that Victor Hernandez, the leader of a conspiracy to sell cocaine and counterfeit pills over the dark web and launder the proceeds through cryptocurrency, was sentenced to over 10 years in federal prison. Hernandez’s sister, Carolyn Hernandez-Taylor, also pled guilty and was sentenced related to her role as a co-conspirator. The case was investigated by the Detroit offices of Homeland Security Investigations (HSI) the Drug Enforcement Administration, and IRS Criminal Investigations. According to the indictment, Hernandez ran a dark web vendor site under the moniker “opiateconnect,” selling illicit scheduled drugs, including cocaine, and various counterfeit drugs. These counterfeit pills were made to look like Xanax —the most commonly prescribed psychotropic medication in the United States used to manage panic and anxiety disorders—but were in fact uncontrolled research chemicals not scheduled for human consumption. Hernandez, according to the indictment, laundered the drug proceeds through non-monetary transactions and intermediary addresses eventually landing at a US-based exchange to cash out the proceeds into fiat currency as shown in the TRM graph below. Federal investigators worked for months to determine the identity of “opiateconnect” and the location he was using. That investigation led to the execution of a search warrant at Hernandez’s house in Detroit, where agents discovered a clandestine drug lab capable of producing upwards of 20,000 pills per hour. They also found around three firearms, a “tub” containing approximately 600 grams of cocaine, thousands of pressed counterfeit alprazolam pills, $340,000 in cash, and more than $1 million in cryptocurrency. The prosecution is part of an Organized Crime Drug Enforcement Task Forces (OCDETF) investigation. OCDETF identifies, disrupts, and dismantles the highest-level drug traffickers, money launderers, gangs, and transnational criminal organizations that threaten the United States by using an intelligence-driven, multi-agency approach that leverages the strengths of federal, state, and local law enforcement agencies against criminal networks. The investigation was conducted by the Detroit Dark Web Task Force, which consists of Homeland Security Investigations, U.S. Postal Inspection Service, U.S. Secret Service, IRS Criminal Investigation, Michigan State Police and U.S. Customs and Border Protection. TRM Labs Labs is proud support federal state and local law enforcement in the fight against the use of cryptocurrencies to launder illicit drug proceeds.

Welcome back to another TRM Labs Weekly Roundup! In this edition, Ari Redbord, Isabella Chase, and Angela Ang break down what you need to know about this week’s top stories in global crypto policy and regulation, including: 1️⃣ New crypto hack numbers from TRM’s threat intelligence team 2️⃣ The release of FATF’s fifth Target Implementation Report 3️⃣ What the Labour Party’s win means for digital assets in the UK 4️⃣ The inclusion of crypto in the Republican party’s priorities in the US 5️⃣ Russian Central Bank’s guidance to use crypto to circumvent sanctions 6️⃣ Korea’s market abuse surveillance system and new regulatory framework Let’s dive in ⬇️

The fifth report on the implementation of Financial Action Task Force (FATF) Recommendation 15 was released on Tuesday. The report commented that implementation of Recommendation 15 is “lagging” with “three quarters of jurisdictions (75%; 97 of 130) . . . only partially or not compliant with the FATF Standards in this area.” Where are the weaknesses? ▪️ Risk assessments ▪️ Effective supervisory enforcement ▪️ Travel rule implementation 🗞️ Be sure to subscribe to our Weekly Roundup LinkedIn newsletter to get your weekly dose of top stories like this, covering all the latest global news in #crypto policy. And if you’re a supervisor thinking about how blockchain intelligence can help you in your role, download our “Elevating Ongoing AML Supervision” guide today ➡️ https://hubs.la/Q02Gbcmp0

Recently, the US Internal Revenue Service (IRS) dropped 365 pages of long-awaited tax rules for #cryptocurrency transactions, and we read it so you don’t have to! Here’s the TL;DR: ➡️  Implementation timeline: Reporting requirements begin in 2025. Transactions will be reported on the new Form 1099-DA. ➡️ Scope and coverage: Applies to custodial brokers such as digital asset trading platforms, hosted wallet providers, kiosks, and certain payment processors (PDAPs). Brokers must report the sales and exchanges of digital assets they manage. The rule excludes decentralized or non-custodial brokers from these reporting requirements; separate regulations will address these brokers later. ➡️ Public feedback and adjustments: Over 44,000 public comments were considered, and adjustments were made to balance implementation challenges with closing the tax gap related to digital assets. 💡Why this matters: The rule is written in a way that strikes a balance between ensuring that digital assets are not used to hide taxable income, while at the same time not including the decentralized ecosystem—as many in the crypto space have feared since the "broker rule" was included in the 2021 infrastructure bill. While DeFi is accepted for now, U.S. Department of the Treasury and IRS make clear that they "do not agree that non-custodial industry participants should not be treated as brokers," but, "would benefit from additional consideration of issues involving non-custodial industry participants." An enormous amount of work goes into a rule like this. We look forward to continuing to work with Treasury, IRS, and the crypto ecosystem to ensure that regulation is fit for purpose and crafted in a way that does not stifle the extraordinary innovation that is occurring in the space.

Sanctions enforcement in #crypto is intensifying, and illicit actors are continuing to find ways to evade controls. Join Isabella Chase, Thomas A., Crystal Noe, and Sophie Bowler on July 30 or 31 (pick the session that works best for you!) for a discussion on the strategies crypto businesses can leverage to detect and stay ahead of common sanctions evasions techniques. You’ll learn: ✅ How to spot five common sanctions evasion techniques and adjust your #cryptocompliance programs accordingly ✅ How the regulatory landscape is changing for crypto businesses ✅ The top trends and concerns for sanctions leaders and practitioners ✅ Key considerations for designing a compliant sanctions program ✅ The role of #blockchainintelligence in fortifying your sanctions program Save your seat now ➡️ https://hubs.la/Q02FDYT50

🎙️ Get the scoop on the latest policy and regulatory news from Nikhilesh De, CoinDesk’s managing editor for global policy and regulation, as he joins Ari Redbord on #TRMTalks! Listen to the full episode now 👉 https://lnkd.in/edy-VZfh

Did you know TRM Academy 🎓 offers more than just certifications? As illicit #crypto activity constantly evolves, staying informed is crucial. That's why #TRMAcademy provides cutting-edge insights from our team of leading analysts through threat intelligence briefs 📄 that deep-dive into emerging trends across threat categories. Here's a preview of some of our recent briefings: ▪️ Contextualizing CSAM addresses Gain insight into how criminals behind CSAM are operating on the blockchain, and how blockchain intelligence can be used to uncover their on-chain activities ▪️ Terrorist financing brief: Mujahideen Brigades Hear how since January 2024, the Gaza and West Bank-based terrorist group Mujahideen Brigades has been soliciting cryptocurrency donations for its operations ▪️ Cash-to-crypto Gain a deeper understanding of how cash-to-crypto services work, and how they have been found to facilitate the off-ramping of illicit funds gained from a variety of scams With TRM Academy, you gain expert analysis from leading threat analysts with deep expertise in #blockchainintelligence and investigations, actionable on-chain insights to help you identify patterns and act on your discoveries, and timely updates so you can stay ahead with the latest information on emerging threats. Our extensive library of courses, certifications, and threat intelligence briefings is always growing. To learn more about TRM Academy and see how you can empower your organization with these resources, click here ➡️ https://hubs.la/Q02FQzjt0

The latest numbers from TRM's threat intelligence team show that hackers stole twice as much money in the first half of 2024 compared to the same period in 2023. So far in 2024, nearly USD 1.4 billion has been lost to hacks and exploits—compared to USD 657 million this time last year—with the median hack 150% bigger. Click here to read the details of this latest research from TRM Labs ➡️ https://hubs.la/Q02FHqwB0