ben shekelberg 
- An undercover IRS agent posed as a crypto trader to trick a dark-web drug dealer into forking over $180,000.
- In June, the agent put up a listing offering to buy bitcoin, attracting a bid from a user called “Lucifallen21,” who has since been arrested.
- Privacy-centric cryptocurrencies have spurred concerns that criminals could use them for illicit activity.
An undercover IRS agent posed as a crypto trader to trick a dark-web drug dealer into forking over $180,000 to the agency before arresting him, according to a report.
The IRS agent, who took on the username “Mr. Coins,” built a reputation on crypto-for-dollars trading site LocalCryptos. In June, Mr. Coins put up a listing offering to buy bitcoin at a premium in cash by mail, shortly attracting a bid from a user called “Lucifallen21.”
Lucifallen21 turned out to be an Indiana man named Chase Hite. In July, Hite was arrested, pending a trial.
Hite and Mr. Coins developed a relationship, during which Hite bought thousands of dollars of bitcoin and monero in exchange for cash – boxing clothing-wrapped physical bills and mailing them to Mr. Coins. Later, Hite revealed that he was involved in trafficking “pills and opioids” as well as cocaine on the dark web, according to court filings.
IRS agents were able to confirm Hite’s identity when they asked the Postal Service to purposely marked one of his cash shipments as lost. Hite fell into the trap, calling into the post office with a number that was then linked to his name. Forensic analysis was also able to pull his fingerprints from the packages.
Privacy-centric cryptocurrencies like monero and zcash have spurred concerns that criminals could use their identity-hiding features to launder money or traffic illicit substances. Still, most illegal activity done with crypto uses bitcoin, analysts say.
