John Khuu, a 29-year-old from San Francisco, California, has been sentenced to 87 months in federal prison after pleading guilty to conspiracy to commit money laundering and operating an unlicensed money-transmitting business linked to his dark web MDMA distribution network.
According to investigators, Khuu imported MDMA from Germany and sold it through various darknet markets between 2020 and 2022. Payments were accepted exclusively in Bitcoin, with the proceeds routed through dozens of accounts and hundreds of transactions—classic laundering behavior aimed at obscuring the source of funds.
The arrest was part of Operation Crypto Runner, a multi-agency initiative launched in November 2022 by the U.S. Department of Justice (DOJ) in collaboration with the U.S. Secret Service (USSS) and the Postal Inspection Service (PIS). The operation targets the growing use of cryptocurrency in drug and fraud-related financial crimes. Khuu’s case adds to a growing list of individuals prosecuted under this effort.
Authorities say Khuu served as both vendor and financial operator. After moving Bitcoin earnings from seller wallets, he would convert the crypto into fiat through unregistered exchanges and layered financial institutions, allowing him to withdraw large sums into U.S. bank accounts with minimal scrutiny—until federal agents connected the dots.
In a separate but related indictment from the Northern District of California, Khuu is also facing charges for the unlawful importation of a Schedule I controlled substance, a federal offense tied to the German MDMA shipments.
Khuu’s sentencing follows a broader trend of federal crackdowns on crypto-driven laundering networks. Just last month, another man in Montana was convicted on similar charges, also as part of Operation Crypto Runner, which has so far led to 21 arrests, many of whom acted as “money mules” for darknet and romance scam rings.
According to Chainalysis, 2024 may mark a record-breaking year for crypto-based money laundering, with estimates topping $40 billion. However, that figure may be conservative, as it only reflects on-chain activity—not illicit profits from real-world crimes like narcotics sales that are much harder to trace.
For law enforcement, Khuu’s conviction is a symbolic win in a field where anonymity and digital assets continue to provide cover for organized trafficking operations.
