An affidavit of a Special Agent with Homeland Security Investigations who tracked down one of the largest Silk Road vendors reveals the existence of a special task force focused on bitcoin-related crimes.

Following the apprehension of David Burchard, an alleged Silk Road marijuana and cocaine vendor, the affidavit of an investigator Matthew Larsen has been made public.

The document, describing the investigation process in detail, includes a chapter “Facts establishing probable cause” which might be of interest for all the bitcoin community:

“I am part of a digital currency task force focused on identifying the use of digital currency to launder the proceeds of criminal activity. As part of this task force, I have been involved in several investigations into unlicensed digital currency exchangers and narcotics distributors on the darkweb who use digital currency to receive payment for the sale of narcotics.”

The issues of “perceived anonymity” have long been discussed. Some supposed that Homeland Security monitors bitcoin’s distributed ledger in real time to track suspicious transactions. The affidavit partly confirms that allegation, providing some cryptocurrency background information: “A large amount of bitcoin sales or purchases by an individual is often an indicator that the individual is involved in narcotics trafficking or the distribution of other illegal items.”

Then, it is reconfirmed by the explanation of how David Burchard got the attention of the special service:

“I began investigating David Burchard based, in part, on his sale of millions of dollars of Bitcoins to an unlicensed digital currency exchanger… I was, and continue to be, unable to identify a legitimate source of Burchard’s large amount of Bitcoins.”

The case could raise the question of whether the anonymity of bitcoin is not a myth. The document provides an answer to this question:

“If a real individual or entity is linked to a public address, it would be possible to determine what transactions were conducted by that individual or entity. Bitcoin transactions are, therefore, described as “pseudonymous,” meaning they are partially anonymous.”

Anna Lavinskaya