Dark-Web Vendor and Pharmacist Charged With Trafficking Drugs Worth $270M in Bitcoin

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A dark-web vendor and his supplier, who allegedly used the murky recesses of the internet to sell drugs and launder money, have been formally charged in the U.S.

  • David Pate and pharmacist Jose Hou were both indicted by a federal grand jury in the District of Columbia on Tuesday for the illegal sale of opioids over the dark web.
  • The seven charges laid out against the pair include conspiring to distribute controlled substances, distribution of controlled substances, conspiring to import controlled substances, conspiring to launder money and laundering of monetary instruments.
  • According to the Department of Justice statement, Pate allegedly purchased OxyContin and morphine pills from pharmacist Hou, who was based in Costa Rica.
  • It is alleged that Pate, who would launder the payments using bitcoin and wire transfers, sold the narcotics on various dark-web markets including The Silk Road and AlphaBay.
  • The claims include that Pate was paid more than 23,903 bitcoin (worth $269,838,576 at press time) overall by customers.
  • Using the online handle “buyersclub,” Pate is said to have advertised the sale of an “old formula” of OxyContin which can be crushed and then inhaled or injected – newer versions are designed to be tamper-resistant to prevent this from happening.
  • Bulk shipments of the drugs were sent in pill form from Costa Rica to U.S.-based co-conspirators, who would then reship orders to a list of customers, the DoJ said.
  • The drugs were often hidden inside tourist souvenirs such as maracas on the journey from Costa Rica to the U.S.
  • After a customer had received their shipment, the dark-web markets would allegedly release the customer’s bitcoin funds held in escrow to Pate.
  • Both men are Costa Rican citizens, while Pate is also a U.S. citizen.
  • “We are firmly committed to combatting the problem of opioid abuse and breaking through sophisticated cyber-enabled barriers employed by criminals to hide their activities,” said Acting U.S. Attorney Michael Sherwin.
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