by Joseph Young
The Federal Bureau of Investigation (FBI) and the US Department of Justice (DoJ) have arrested a man in Connecticut for allegedly stealing over six figures worth in dollar terms of bitcoin from over 10,000 dark web marketplace users.
Michael Richo, a 32-year old man, received five counts of criminal charges, including access device fraud, computer fraud, wire fraud, aggravated identity theft, and money laundering for logging into tens of thousands of dark web marketplace accounts to transfer account funds back to his bitcoin wallet.
According to the official affidavit submitted by head agent Michael Morrison, the FBI continuously investigated Richo’s illegal operations on the dark web since 2013, which allowed him to obtain a large number of user accounts and personal data by setting up false login pages.
When users registered their accounts on Richo’s fake login form, he took all user data, logged them, and redirected all information to the actual dark web marketplaces, which ultimately allowed him to create a massive database of sensitive user information, bitcoin addresses, and passcodes.
“Richo used two types of scams to steal user’s login information to these sites. He would post fake links on forums to these markets which would direct users to a fake login page hosted on a laptop at his house. The login page would look exactly like the real login pages for the various market sites. When users would attempt to log in he would steal their usernames and passwords,” stated Morrison.
The other techniques involved posting fake links on forums to monitor his target’s traffic and steal their information. It also noted that Richo utilized a unique program called “Bitcoin Monitor,” which notified him as soon as a deposit was made into one of the wallets listed on his private database of user accounts. He utilized a technique called “Bitcoin Fog” to anonymize the trail of user funds he extracted from various user accounts.
The FBI eventually unraveled the money trails behind Richo’s hidden bitcoin transactions upon the formation of connections between the bank account of Mediapen, Richo’s company, and a LocalBitcoins account. Each time Richo was in need of cash, he went to peer-to-peer bitcoin trading platform LocalBitcoins to obtain cash and move the exact amount to his bank account.
“On November 8, 2013, there were four bitcoin sale transactions on LocalBitcoins for $200, $350, $999.88, and $1,000. That same day, there were four deposits into the Mediapen’s Bank of America account for $200, $350, $999.88, and $1,000 with the description counter credit,” explained Morrison.
In total, the FBI estimates that Richo had withdrawn over $100,000 from the period of 2013 to 2014, which including other criminal charges including wire fraud and identity theft, left Richo with 57 years in prison. However, Softpedia exclusively reported on October 10 that Richo was released on a $100,000 bond in the trial held.
While such sophisticated operations were difficult to investigate back in 2014, the emergence of innovative transaction and wallet-tracing software has simplified the stalking of dark web transactions and money trails.
For instance, blockchain startup Skry and dark web intelligence company Terbium Labs announced their collaboration on new a fraud detection technology on October 12. The technology will allow law enforcement agencies and government organizations to map out the illicit settlement of payments and criminal activities on the dark web, utilizing of big data and real-time risk assessment software.
As these solutions continue to become more advanced in the near future, business, individuals, and law enforcement will be able to detect criminal usage of cryptocurrencies such as bitcoin more efficiently.