$54 Million in Cryptocurrency Seized in NJ Drug Trafficking Scheme

U.S. Authorities Clamp Down on Digital Earnings Linked to Narcotics Distribution

MORRISTOWN, NJ – In an aggressive move to confiscate proceeds from illegal narcotics distribution, the U.S. Attorney's Office has filed a civil forfeiture action, targeting over $54 million of cryptocurrency in and around New Jersey. U.S. Attorney Philip R. Sellinger spearheaded the announcement, emphasizing the office's commitment to dismantling any financial gains tied to criminal activities.

“The civil action today aims to reclaim millions in cryptocurrency, alleged proceeds from drug sales. Whether in tangible cash or complex cryptocurrency, we remain resolute in intercepting illicit gains," declared U.S. Attorney Philip R. Sellinger.

Adding weight to the statement, FBI-Newark Special Agent James E. Dennehy pointed out the misconceptions criminals have regarding the obscurity of their actions. “Criminals often think the darknet shields them, but our $54 million forfeiture should serve as a stark warning. We are adept at tracing illicit behavior and ill-gotten gains, ensuring real-world consequences."

Based on the complaint, between 2010 and 2015, Christopher Castelluzzo, alongside other cohorts, engaged in the distribution of various narcotics. Circa 2013, they transitioned to darknet platforms, selling drugs in exchange for Bitcoin. 

Castelluzzo subsequently leveraged his Bitcoin earnings from drug sales to acquire 30,000 Ether during Ethereum’s Initial Coin Offering in 2014. He also amassed 30,000 Ethereum Classic in 2016, which he channeled into diversifying his cryptocurrency portfolio. The present action seeks forfeiture of all cryptocurrency linked to Castelluzzo's narcotics endeavors.

Presently incarcerated, Castelluzzo is serving a dual 20-year sentence for drug distribution. Despite his imprisonment, as Ethereum's value surged, he schemed to evade taxes and transfer the 30,000 Ether out of the U.S. 

His plans, however, unraveled when U.S. officials intercepted his intentions via recorded prison calls in 2021. Prompt action led to the seizure of his cryptocurrency assets linked to his drug trafficking activities.

Today, Castelluzzo's 30,000 Ether holds an estimated value of $54 million.

Commending the diligence of various agencies, U.S. Attorney Sellinger acknowledged the FBI’s Virtual Assets Unit (VAU), FBI Newark Atlantic City Resident Agency, FBI-Denver Field Division, Homeland Security Investigations Newark, the New Jersey Attorney General’s Office, New Jersey Special Investigation Division, and the Colorado Springs Police Department for their collective efforts in the investigation.

It should be noted that the details presented in the complaint are solely allegations at this juncture.