– When 32-year-old Paul Howard was looking to pay for a shipment of cocaine and MDMA powder, the Victorian came up with a very 21st century solution to the age-old criminal’s dilemma of how to cover your tracks. He used Bitcoins – the anonymous digital trading system that gives users the ability to but and sell in a parallel financial universe beyond the control of banks or regulators.
Howard found it easy enough to pay for his illicit goods but came unstuck after the parcel landed in Australia. Law enforcement authorities had started taking a keen interest in his regular mail deliveries from the Netherlands and Germany.
In February this year, Howard was jailed for three years and six months after pleading guilty to importing 60 grams of cocaine and MDMA via an online store, and possessing 32 controlled weapons.
Howard became the first Australian to be convicted of drug importation through online stores such as the Silk Road, a site accessed through what is known as the Deep Web or dark side of the internet. As investigators discovered, he had used the site 11 times to buy drugs.
The following month, another 20 people were arrested throughout the country, and 18 kilograms of drugs, worth $8.2 million, were seized apart of co-ordinated raids on drug imports organised through similar online sites. Almost all these sites conduct trade only on Bitcoins.
Australian Crime Commission acting chief executive Paul Jevtovic says the virtual currency’s anonymity makes it highly attractive to criminals and money launderers. Though little is yet known about how widespread it is in illicit markets, Bitcoins have become of growing concern to the agency.
Meanwhile, Bitcoins are being used legitimately in Australia for everything from buying meat via online butcher Honestbeef to electronic at Gadgets Direct, clothes from Patcht or books from Favoryta. In about four years, the virtual currency has gone from a standing start to $1 billion worth being traded in April this year alone.
But while the currency is unstable and fluctuates like commodity prices, the anonymity it offers and zero transaction fees drives it’s growing popularity, particularly in the badlands of cyberspace.
Drugs, child sex material, illegal gambling, guns and even the hiring of hitmen can be found and paid for via sites on the Deep Web, the hidden side of the internet that requires special software to access.
The illicit services found in the Deep Web, provided by darknets – secret networks between trusted peers – are paid for with Bitcoins, making the transactions almost impossible to trace.
NSW Police Minister Michael Gallacherbsays the phenomenon is causing serious concern inside the state government, with evidence that Bitcoins are being used to buy firearms, child exploitation material, stolen credit card data, forged passports, bomb making instructions and extremist literature.
In April last year, the US Federal Bureau of Investigation detected instances of online game’s virtual currency being used to purchase in-game virtual items, which were then on-sold to other players for “clean money”, in a cycle of exchange that legitimised dirty money.
In no similar report in July last year, the Australian Transaction Reports and Analysis Centre (Austrac), the federal agency that charts money flow in and out of the country, flagged the potential for criminals to use online video games and virtual worlds, such as Warcraft or Second Life, with digital currencies such as Bitcoin.
Austrac chief executive John Schmidt warns that digital currencies will become even more attractive to criminal groups as financial regulations tighten.
But he says “funds transferred via digital currencies and virtual worlds will always almost intersect with the traditional financial channels, such as banks , at some point, whether as physical currency or electronic funds”.
Bitcoin transactions are listed in logs or a “blockchain” but the users’ IP address (which identifies the computer) is not linked to that transaction, making it relatively anonymous if real names or addresses are not used.
Charles Sturt University financial crime expert Hugh McDermott said law enforcement is a catch-up game when it comes to technology. “Criminals have been using Bitcoins for some time because it is not regulated and it’s not controlled.
“There is also a huge jurisdiction because it’s online. We’re really behind the eight ball. Eastern European crime groups are big on this. It’s the No. 1 growth area of money laundering. We need to move quickly with this” – Ilya Gridneff


About Jumpin' Jack Cash

Deep connections are the most important aspect of my existence. I don’t care if people don’t know what they want. I love books. I’m cynical of love stories, although I’m romantic. I adore gardens. I like women who challenge me. I love the rain as an excuse to stay inside and dream. I'm furiously impatient. If I ask you a question best to tell me the truth as I'm likely to already know the answer. I'm a carnivore. I continuously underestimate the magic of fresh flowers in my home. I love warm rain in the summer. My mood elevates to epic proportions when the sun shines. Tell me not to do something and I'll do it twice and take photos. Running is my antidepressant. I loathe lies. I rarely forgive a lie. Loyalty and honesty are my most noble virtues, and I value them more than anything in other people. I love to love, and am able to fall in love very quickly, although it's only ever happened once. I understood myself and fixed myself only after destroying myself. My greatest excitement comes from deliberately getting lost in foreign cities. I can be extremely loud and frighteningly silent. I hate insinuations. I love storms. Justice for all. I'm a proud man, but welcome the influence of the feminine soul. I have two sisters. I’m a dreamer. I’m a deep thinker. Don’t deal with guilt trips or drama that well. I'm extremely stubborn and persistent. I'm brilliant at keeping secrets. I love driving. I become absolutely and completely lost while watching a burning fire. When the toast pops from the toaster I’m never ready and shit myself. I play the guitar, but require much improvement. Solitude and warmth of the sun are perfect together. I’ve been married once and now divorced. I’m a music junkie. Chocolate mousse is the shit. I curse too much. I find it difficult to make friends. I spent four years as a firefighter. I’ve run my own company since 1991. Bright lights, big cities. I’ve been an executive producer of a feature film. Some people don’t care, and that’s the biggest let-down of the human race. There are cures and solutions for many evils, but no remedy for the worst of them all - the apathy of human beings. The sound of the Italian language being spoken is as good as my favourite music. I hate corrupt cops. I relentlessly and passionately pursue anybody and anything that sets my soul on fire. I'm a dog lover, and all my dogs are considered family members. I have an obsession with photography. I have some close friends who are household names, but shall always remain anonymous. I’m crazy but not lazy. Losing a soulmate has hurt me badly. My two young sons are the nucleus of my universe. I love airports. I love freedom. If you are dishonest or disloyal, I can erase you from my life and memory immediately and permanently. I yearn to explore, dream about and discover as many friendships, deep connections and places, one possibly can in a lifetime.
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