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More than play money

Ilya Gridneff (via SMH) | June 4, 2013
A virtual currency loved by geeks is fast becoming the currency for crooks.

Currrency for crooks: A twenty-five bitcoin, right, and one bitcoin.
Currrency for crooks: Bitcoins. Photo: Bloomberg

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 which gives users the ability to buy 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, he 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 across the country, and 18 kilograms of drugs, worth $8.2 million, were seized as part of co-ordinated raids on drug imports organised through similar online sites. Almost all these sites conduct trade only in bitcoins.

The Australian Crime Commission's 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. Bitcoin has become of growing concern to the agency. ''The ACC is currently working with partners to explore the Bitcoin market and other digital currencies, to better understand its size and criminal threat,'' he said.

Meanwhile, Bitcoin is being used legitimately in Australia for everything from buying meat via online butcher Honestbeef to electronics at Gadget Direct, clothes from Patcht or books from Favoryta.

In just over four years, the virtual currency has gone from a standing start to $US1 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 drive its 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.

 

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