Dark-web drug dealers selling ketamine, MDMA and counterfeit Xanax in every state in America. An identity thief hacking into his targets’ cellphones. A member of an Eastern European organized crime syndicate.
These, prosecutors said, were just some of the customers of Thomas Spieker, a former party producer who was charged on Thursday in state court in Manhattan with laundering more than $2.3 million in Bitcoin for criminals around the world from 2018 to 2021.
Prosecutors described Mr. Spieker, 42, as a virtual Bitcoin A.T.M., exchanging cash for cryptocurrency. In addition to the $2.3 million in Bitcoin he was charged with laundering, he was accused of converting more than $380,000 in cryptocurrency into cash.
Mr. Spieker was charged with several counts of money laundering and unlicensed money transmission. He pleaded not guilty and was released on his own recognizance. His lawyer, Richard Verchick, declined to comment.
Charged with him were:
Zashan Khan, 30, and Cosmas Siekierski, 25, of Manhattan, who prosecutors said sold illegal drugs over the dark web, a part of the internet where illegal activity thrives and that is accessible also only though special software. An online storefront the two operated, OVO sweatshop, took its name from the rapper Drake’s record label, October’s Very Own.
Anderson LaRoc, 33, of Brooklyn, who prosecutors said targeted 30 victims in an identity-theft scheme.
Dustin Sites, 33, of Brooklyn, who prosecutors said helped Mr. Spieker by opening bank and cryptocurrency accounts to help launder money.
John Humphrey and Fidello Palermo of Rochester, N.Y., both 51, who prosecutors said took over the OVO sweatshop operation, and who were stopped on a trip to Brooklyn and found with 1.7 kilograms of powder and crystalline ketamine and 140 clear vials of liquid ketamine.
All six pleaded not guilty and were released on their own recognizance.
“This sprawling web of international money laundering helped drug traffickers, an organized crime ring, and scammers hide their criminal activity and transmit their proceeds around the globe,” Alvin Bragg, the Manhattan district attorney, said in a statement.
Mr. Spieker, who once worked in equities at the investment bank Goldman Sachs, has been a Bitcoin aficionado since the currency’s early days. In 2014, he was the subject of a Vice article that highlighted his work as a DJ working under the name S!CK.
Mr. Spieker said in the article that he had used Bitcoin investments to finance a regular dance party in Brooklyn. He claims on his LinkedIn page that he has produced parties featuring the rapper A$AP Rocky, the group Death Grips, and the DJs Araabmuzik and DJ Rashad.
At some point, Mr. Spieker appears to have pivoted from musical genres like dubstep and witch house to different undertakings. In a 2018 Facebook post, according to prosecutors, he advertised his money-laundering services, pitching them as being for potential clients who wanted to “STAY COMPLETELY OFF THE RADAR.”
From March 2018 to June 2020, Mr. Spieker, working with Mr. Sites and others, opened 29 bank accounts and eight cryptocurrency exchange accounts, prosecutors said. His fee ranged from 4 to 12 percent of the money being laundered.
Mr. Spieker’s most prominent customer, whom he described as his “whale client,” was the Eastern European organized crime member, prosecutors said. Mr. Spieker laundered $620,000 for the client, they said.
A Guide to Cryptocurrency
A glossary. Cryptocurrencies have gone from a curiosity to a viable investment, making them almost impossible to ignore. If you are struggling with the terminology, let us help:
Bitcoin. A Bitcoin is a digital token that can be sent electronically from one user to another, anywhere in the world. Bitcoin is also the name of the payment network on which this form of digital currency is stored and moved.
Blockchain. A blockchain is a database maintained communally and that reliably stores digital information. The original blockchain was the database on which all Bitcoin transactions were stored, but non-currency-based companies and governments are also trying to use blockchain technology to store their data.
Cryptocurrencies. Since Bitcoin was first conceived in 2008, thousands of other virtual currencies, known as cryptocurrencies, have been developed. Among them are Ether, Dogecoin and Tether.
Coinbase. The first major cryptocurrency company to list its shares on a U.S. stock exchange, Coinbase is a platform that allows people and companies to buy and sell various digital currencies, including Bitcoin, for a transaction fee.
DeFi. The development of cryptocurrencies spawned a parallel universe of alternative financial services, known as Decentralized Finance, or DeFi, allowing crypto businesses to move into traditional banking territory, including lending and borrowing.
NFTs. A “nonfungible token,” or NFT, is an asset verified using blockchain technology, in which a network of computers records transactions and gives buyers proof of authenticity and ownership. NFTs make digital artworks unique, and therefore sellable.
Web3. The name “web3” is what some technologists call the idea of a new kind of internet service that is built using blockchain-based tokens, replacing centralized, corporate platforms with open protocols and decentralized, community-run networks.
DAOs. A decentralized autonomous organization, or DAO, is an organizational structure built with blockchain technology that is often described as a crypto co-op. DAOs form for a common purpose, like investing in start-ups, managing a stablecoin or buying NFTs.
Mr. Spieker is also accused of laundering more than $267,000 for the operator of a Nigeria-based “romance scam,” who used the name Mark Kindly. Mr. Kindly, prosecutors said, persuaded a nurse he met on a New York dating site to send him money under various false pretenses, including that he was being held in a Dubai prison and needed to pay off his captors. The woman gave Mr. Spieker and Mr. Sites over $200,000, prosecutors said.
There were signs that Mr. Spieker was concerned about being caught. His Google search history, according to the indictment, revealed searches for “bitcoin money laundering” and articles about people who had been convicted of Bitcoin money laundering.
There have been several notable Bitcoin laundering cases in New York this year. This month, a 47-year-old man pleaded guilty in Manhattan to drug trafficking, money laundering and conspiracy for selling drugs over the dark web and laundering his earnings in cryptocurrency. The man, Chester Anderson, operated two digital storefronts that he used to sell 10,000 tablets of generic Xanax, as well as ketamine and GHB to undercover Manhattan district attorney investigators.
Last month, federal prosecutors charged a married couple, Ilya Lichtenstein, 34, and Heather Morgan, 31, with conspiring to launder billions of dollars in Bitcoin. Like Mr. Spieker, Ms. Morgan dabbled in music; she made satirical rap songs using the name Razzlekhan.
Lananh Nguyen contributed reporting.