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Joseph Farace, 72, of Sparks, Maryland, received a 19-month federal prison sentence that will be followed by two years of supervised release.
His son, Ryan Farace, of Reisterstown, a previously convicted felon, got a 54-month sentence, US Attorney for the District of Maryland Erek L. Barron said in a joint release.
Ryan Farace was first convicted for a scheme to manufacture and sell Xanax in exchange for Bitcoin through sales on darknet marketplaces. Tracing techniques determined he used the vendor name ‘XANAXMAN’ and received more than 9,138 Bitcoins from addresses associated with darknet marketplaces.
Before sentencing in 2018, Ryan met with DEA investigators and stated that he “did not recall the location or means by which he could access any additional Bitcoins about which the government was not already aware,” authorities said. During sentencing, Ryan maintained his stance that he had cooperated with investigators — but afterward, authorities discovered more drug proceeds in the form of approximately 24 Bitcoins.
Meanwhile, while incarcerated, Ryan conspired with his father, Joseph Farace, and others to keep his operation afloat.
Authorities say Ryan sent about 71 Bitcoins from digital wallets he controlled to online exchangers and retailers.
Records show that he used some of the proceeds to benefit his father, including sending about $3,341.65 worth of gift cards. He used a contraband cell phone and an encrypted email service to communicate with his father about the purchases.
Joseph was asked by his son in August 2020 to transfer more than 2,874 Bitcoins to a third party, in order to move the funds into a foreign bank account, giving his father the wallet address by typing it into the back cover of a prison library book and mailing it out.
The father and son used email and phone calls to discuss Bitcoin transference using coded language until September 2020, when Joseph had transferred more than 2,874 Bitcoins to third-party recipients, “all of which were proceeds of R. Farace’s 2018 drug crimes,” authorities said.
Their operations came to a halt on February 10, 2021, when federal agents seized the 2,874.90419597 Bitcoins that Joseph had transferred, which had a market value of between $65 million and $150 million at the time.
On May 11, 2021, the government seized 58.742155166 Bitcoins that were also proceeds of Ryan’s drug trafficking.
In addition to the sentencing, the father and son must also forfeit all of the Bitcoin seized during the investigation.
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