Criminals' Online Market Targeted by U.S. After Founder Dies (2)

(Bloomberg) -- The U.S. government sued to seize luxury cars, international real estate and bitcoins owned by the alleged mastermind of AlphaBay, the biggest criminal marketplace on the dark web, just days after he reportedly hanged himself in his jail cell.

AlphaBay was allegedly created in 2014 by Alexandre Cazes, a 26-year-old Canadian living in Thailand. It had 200,000 users and 40,000 sellers with about 369,000 listings for drugs, guns, fake IDs, malware and other illegal goods when it was shut down this month, according to the government. That makes it 10 times bigger than the Silk Road drug bazaar that ended with its founder’s arrest in 2013, the U.S. said.

"Most of this activity was in illegal drugs, pouring fuel on the fire of the national drug epidemic," Attorney General Jeff Sessions said in a press conference in Washington Thursday. "As of earlier this year, 122 vendors advertised fentanyl and 238 advertised heroin, and we know of several Americans who were killed by drugs sold on Alpha Bay."

Cazes, known online as "Alpha02," ran the website from its inception and controlled massive profits generated from the operation, collecting tens of millions of dollars in commissions, the government said. Cazes was arrested in Thailand on July 5, a day after the website was taken down at the request of the U.S. According to the Bangkok Post, Thai police said Cazes hanged himself in jail where he was being held pending extradition to the U.S.

Users accessed AlphaBay on The Onion Router, or TOR, a network of computers designed to hide the identity of users, according to the government. Customers bought illegal goods using digital currencies, the U.S. said.

‘Pimp_Alex_91@hotmail.com’

Among the items the U.S. sued to seize are a 2013 Lamborghini Aventador, a Porsche Panamera, a BMW motorcycle, properties in Thailand, Cyprus, Liechtenstein and Antigua and Barbuda, and digital currencies including bitcoins, ethereum and ZCash.

AlphaBay was taken down through the efforts of law enforcement authorities in the U.S. Thailand, the Netherlands, Lithuania, Canada, France and the U.K., according to the government.

Law enforcement authorities in December discovered a link between Cazes’ personal email account, "Pimp_Alex_91@hotmail.com," and the AlphaBay site. Agents then traced the information to Cazes in Bangkok, according to the government. A federal judge in Fresno, California, issued a warrant for his arrest based on a June 1 indictment made public today, which charged Cazes with 16 criminal counts, including conspiracy, money laundering and computer crimes.

Between May and July, agents made undercover buys of marijuana, heroin, fentanyl, methamphetamine, fake IDs and an ATM skimmer for stealing payment card information.

On July 5, the Royal Thai Police, with help from the Federal Bureau of Investigation and Drug Enforcement Agency, arrested Cazes in his Bangkok home. Agents found his laptop open and logged into AlphaBay’s server as "Admin," according to prosecutors. The laptop contained a financial statement listing Cazes’ net worth as $23 million. Cazes died July 12 while in custody.

‘Anonymous Marketplace’

Hundreds of millions of dollars in illegal goods were sold through AlphaBay, with the website taking a commission of 2 to 4 percent, according to the government. Day-to-day operations were run with the help of as many as ten anonymous employees who went by names that included "Disc0," "Trappy," "BigMuscles," "Botah," "Onionhood" and "MountainHigh9."

Silk Road, formerly the biggest illegal online marketplace, operated from 2011 to 2013. The site’s creator, Ross William Ulbricht, known online as "Dread Pirate Roberts," was convicted of conspiracy and drug trafficking in 2015 and sentenced to life in prison.

Prosecutors said AlphaBay didn’t disguise the fact that its activities violated many laws. An entry on its "Frequently Asked Questions" section asked, "Is AlphaBay Market Legal?" The answer, according to prosecutors: "Some people have really asked this question. Of course not. We are an anonymous marketplace selling drugs, weapons and credit cards. Make sure you access the website through Tor or through a VPN to ensure anonymity. We take no responsibility if you get caught, so protecting yourself is your responsibility."

The case is U.S. v. Cazes, 17-at-00557, U.S. District Court, Eastern District of California (Fresno).

(Updates with Attorney General remarks in third paragraph.)

--With assistance from David McLaughlin and Kathleen Miller

To contact the reporters on this story: Bob Van Voris in federal court in Manhattan at rvanvoris@bloomberg.net, Chris Strohm in Washington at cstrohm1@bloomberg.net.

To contact the editors responsible for this story: David Glovin at dglovin@bloomberg.net, Joe Schneider

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