Bitcoins Seized In Drug Bust 198
First time accepted submitter Salo2112 writes "In a case believed to be the first of its kind, federal authorities have seized a Charleston man's virtual currency due to an alleged drug law violation with possible links to a shadowy online black market. From the article: 'The U.S. Drug Enforcement Administration recently posted a forfeiture notice indicating that agents had seized 11.02 Bitcoins worth $814 from 31-year-old Eric Daniel Hughes for allegedly violating the federal Controlled Substances Act. No other details were provided.'"
It was bound to happen (Score:5, Insightful)
I'm surprised it took so long.
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Re:It was bound to happen (Score:4, Insightful)
And have a good backup. Even if the seized money is encrypted, it's still seized and unlikely to be returned.
Re:It was bound to happen (Score:5, Funny)
147 hours fucking a horse on a live webcam is more than "a few".
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Re:It was bound to happen (Score:5, Funny)
Time flies when you're having fun.
Extra flies when you're fucking a horse.
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Re:It was bound to happen (Score:5, Interesting)
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If they "seized" his wallet, wouldn't they be unable to get the money as it's encrypted?
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That may be inconsequential. In the past, the main goal of seizing drug money (in this case, the bitcoins) has been to gain evidence in building a drug case. Namely, that the physical set of bills was "sent from" a buyer and "received by" someone in exchange for illegal narcotics. The usage of said money to buy new jerseys for the police softball team was always a perk, but ultimately not relevant.
Thing is, this guy must not have used The Silk Road, all transactions there are put through a so-called "tumbl
Re:It was bound to happen (Score:4, Informative)
Which country do you live in? (Score:2)
In the past, the main goal of seizing drug money (in this case, the bitcoins) has been to gain evidence in building a drug case. Namely, that the physical set of bills was "sent from" a buyer and "received by" someone in exchange for illegal narcotics. The usage of said money to buy new jerseys for the police softball team was always a perk, but ultimately not relevant.
Do you actually believe this? I find it hard to believe that anyone could be so naive. Maybe I'm just missing the sarcasm.
Or maybe you're talking about police in your home country. Here in the U.S.A. police routinely seize valuables with little or no justification, relying on the threat of violence to get what they want in the street and then relying on their privileged positions within the legal and political systems to make sure no one can do anything about it.
Departments are routinely allowed to k
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I used to think this position was paranoia*, but then I saw an episode of COPS (which I don't normally watch) where narc officers were selling something that looked like drugs, and then seizing the buyer's vehicles as forfeit. That's not what these forfeiture laws were originally intended for. Apparently, it does happen, at least in some places.
*(I still believe that most cops either don't know, or are unwilling participants during normal confiscation proceedings.)
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There are many police departments around the country which receive most of their funding from selling assets seized in civil forfeiture laws. It has become the norm in many places, rather than the exception it used to be.
Here is one example of many: http://www.aclu.org/blog/criminal-law-reform/easy-money-civil-asset-forfeiture-abuse-police [aclu.org]
Re:Which country do you live in? (Score:5, Insightful)
There have been more than one case of a police officer (often chief or higher-up) that ordered a raid of a house, no drugs found, house still seized, then used as an undercover or safe house that made it functionally that officer's house. When you give financial incentive to bad behavior, then the bad behavior is encouraged, even if that wasn't the goal.
There are simple fixes, but the governments don't ever agree to them. They like the for-profit seizures and tickets. The agency issuing fines (or seizures) shouldn't be the agency keeping the money. When you separate the money, you'll change the behavior. No matter how many speeding tickets the town issues, there will be no income from it. You'd see the speed traps decrease, and a greater focus on safety, rather than revenue. Make percentage-take camera systems illegal (where the company running the cameras gets a portion of the revenue). There are documented cases where they shortened yellow lights to catch more people, decreasing safety to get more revenue.
Money is causing corruption, so remove the money from the equation.
Re:It was bound to happen (Score:5, Insightful)
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Re:It was bound to happen (Score:5, Interesting)
Re:It was bound to happen (Score:4, Insightful)
Yes, but only because the USA's Federal Government hates competition.
Re:It was bound to happen (Score:4, Insightful)
Why is this statement modded down? It's a perfectly legitimate assessment of the flow of money and labor. If people were allowed to trade their own labor or goods without having to invoke the mandatory use of Federal Reserve notes/bits it would be much more difficult for the USA's Federal Government to put a toll on that transaction. Indeed Bitcoin is a competing currency that allows people to bargain directly with one another which the Federal Government would interpret as competition - in much the same way Taxi unions in Houston declared bicycle rickshaws as "stealing" from them and had the rickshaws regulated out of existence. The US Government - unlike the Taxi Union - sees ALL business transactions done without them as competition and since they have direct law making power will address such things directly.
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Which part of "Bitcoins seized in drug bust" did you and GP miss to dive into "It's a plot against Bitcoin!" rant? What would you rant about if the title was "VPN access credentials seized in drug bust", "Truecrypt volumes seized in drug bust", "Microsoft Windows installation seized in drug bust", "iPhone seized in drug bust", "Pair of blue socks seized in drug bust", ...?
I'd say mod whole this story as offtopic.
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Bull Shit. (Score:3)
As with everything else there's a form for that! [irs.gov] We should charge the feds for doing paperwork for them all the damned time.
Also, they're serious about it [lasvegassun.com] even ignoring the face value of legal US tender to prosecute.
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Re:It was bound to happen (Score:5, Interesting)
If people were allowed to trade their own labor or goods without having to invoke the mandatory use of Federal Reserve notes/bits it would be much more difficult for the USA's Federal Government to put a toll on that transaction.
Yes, we get that Bitcoin is potentially useful for tax evasion. Can you spell out why that is socially desirable?
Indeed Bitcoin is a competing currency that allows people to bargain directly with one another which the Federal Government would interpret as competition
People do bargain directly with each other now. The government isn't involved in that. But if good or services are sold, that transaction tends to be subject to taxes, although not always. And that does ignore the underground economy that tends to involve cash transactions.
I don't think you are showing much of a case here.
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Yes, we get that Bitcoin is potentially useful for tax evasion. Can you spell out why that is socially desirable?
There are massive arguments in favour of tax havens. Most effect and help people who don't use them more then you would ever think.
The biggest one in my opinion is that it creates competition for governments. You might think this is a bad thing if you are a big and unwieldy government, who isn't providing visible value for the taxation. But if you are a normal person, then it means that there is downward pressure on the government to provide value for the money it is stealing from its citizenry.
Forbes: W [forbes.com]
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Yes, we get that Bitcoin is potentially useful for tax evasion. Can you spell out why that is socially desirable?
It is socially desirable to avoid paying taxes because the goverment just hands it over to the NSA to spy on us.
And they have yet to produce anything of value from all that money.
Hows that...
More crappy moderation. (Score:4, Insightful)
As I comment this is at a -1.
I would say not wanting to pay someone to violate your rights while monitoring and punishing your activities is a perfectly reasonable answer.
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Because some people don't approve of robbing from the poor to give to the rich.
Simple as that.
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How about roads? What about an army? Or police? Fire departments? Those come from taxes. And if you try to argue "every transaction", then just think about how eager people are exploit every loophole they possibly can -- you exempt things from taxes, and people use those to the fullest (as they already do for deductions).
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"If you punish ordinary opposing views in debate you aren't committed to free speech. Prove me wrong."
http://cryptome.org/2012/07/gent-forum-spies.htm [cryptome.org]
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Yes, we get that Bitcoin is potentially useful for tax evasion. Can you spell out why that is socially desirable?
Tax evasion isn't what's "socially acceptable". Unrestricted trade is. The United States has become the 300 pound gorilla in the room, telling telecommunication companies to sign secret agreements to tap all their lines, even when they aren't in the US. They freeze accounts of political enemies. And that's not even touching on all the trade restrictions from patent and copyright law, etc.
A currency controlled by no government is immune to all of these problems, and while tax evasion is a side effect of this
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The IRS can want all day long.
What the IRS gets is the pertinent question. No paper trail, no transaction.
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People do bargain directly with each other now. The government isn't involved in that. But if good or services are sold, that transaction tends to be subject to taxes, although not always. And that does ignore the underground economy that tends to involve cash transactions.
Not sure about where you live, but here in Oz sales in non-cash forms can still be taxed.
I.E. if I paid you in chutney, the govt will still demand 10% (well 10% of the market value of the chutney).
Same for income, but we have a progressive rate for income tax, sales is a flat 10% so it's an easier example.
I could conduct business in foreign currency, bit coins or pig shit, this does not free me from tax obligations (and the ATO knows it).
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Lots of big state mods today.
How can I troll them? I know! Marxism sucks because eventually you run out of other peoples money and/or labor!
Re:It was bound to happen (Score:5, Interesting)
Because it's totally off topic, this has nothing to do with what bitcoin is. If you get busted for drugs, the police will cease anything of value including cash, real estate, possessions, if you buy gear for your WoW character or land in Second Life with drug money that has resale value they can in theory cease that one too. The point is that bitcoins have been hyped up as anonymous money to buy drugs so lots of dealers should have bitcoins which makes it surprising that they haven't found any to cease before. Nothing here happened to his bitcoins that wouldn't have happened to anything else he owns.
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The point is that bitcoins have been hyped up as anonymous money to buy drugs so lots of dealers should have bitcoins which makes it surprising that they haven't found any to cease before. Nothing here happened to his bitcoins that wouldn't have happened to anything else he owns.
(cringes at typo) Okay, it's not anonymous money exactly, but it is money that can be traded without being associated with a real world identity. As far as "dealers" and "drugs", that's separate -- bitcoin is popular because it's resistant to seizure -- once a sale is made, the government has to seize the account it currently resides in. It can't simply go to a bank, serve a warrant, and say, "all your base are belong to us." A far cry from, say, Paypal or any other financial service. And large amounts of c
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*Sigh*. I've said it before, but it doesn't appear to be penetrating the tinfoil.
The US goverment doesn't care whether you conduct your transactions in dollar, Bitcoin
Re:It was bound to happen (Score:5, Insightful)
Surely you mean the moron with Insightful mod?
"Guy got caught dealing drugs, got his posessions confiscated, there were Bitcoins in there" - "It's because govt hates Bitcoin!"
FFS, from items in other case in the seizure notice:
13-DEA-582125, Snap-On Tool Cabinet and Assorted Tools, (1) Snap-On Rolling Tool Cabinet, #:s437254a; (6)
Assorted Testers; (1) Snap-On 8 piece 1/2" Rachet/Wrench Set; (1) Snap-On 4 piece 1/2" Rachet/Wrench Set; (36)
Assorted Screwdrivers; (16) Speciality Tools; (32) Assorted Allen Wrenches; (56) Assorted Sockets 3/8"; (22) Socket
Extensions 3/8"; (1) Adapter 1/2" - 3/4"; (11) Assorted Rachets/Wrenches; (1) Nut Driver 1/4"; (1) Allen Tool Combo;
(1) Ryobi Drilling and Driving Accessory Kit; (36) Assorted Rachets/Wrenches/Sockets; (5) Assorted Snap-On Tools;
(4) Assorted Rachet/Extensions; (8) Assorted Vice Grips/Wrenches; (1) Blue Point Rachet Wrench Set 5/16"-3/4";
(68) Assorted Combination Wrenches; (1) Snap-On Box End Combo 7/8"; (3) Assorted Wrench Sets; (1) Roberts
Knee Kick Carpet Stretcher 10-412; (1) Snap-On 3x5 Toy Tool Box; (1) Ryobi Temperature Sensor, #:CW1112; (9)
Government hates wrenches!
captcha: deluding - it surely knows.
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Re:It was bound to happen (Score:5, Insightful)
You don't have to convicted of anything to have your property stolen by the government. It has eminent domain over everything you have, including the corpse you presently occupy.
Re:It was bound to happen (Score:5, Insightful)
In the War on Drugs in the US, the Police can and will confiscate all your property if you are accused of a drug felony.
FTFY
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It's true - the 4th Amendment's protections don't apply to alleged drug offenses, so says case law. You can lose your possessions without trial if it's because the local plod thinks you're selling illegal drugs.
Re: It was bound to happen (Score:3, Interesting)
Not exactly. Forfeiture is a separate, civil proceeding against the property itself, and not the owner. In order to prevail, the DA has to prove only that it was more likely than not that the property in question was the proceeds of, or used to advance, criminal conduct. So it is much, much easier to steal property through forfeiture than it is to convict someone of a crime. In some cases the property is taken even if the person is found not guilty in a court. In some even more egregious cases, the property
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To me, that does sound exactly like GP said.
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Not only that, the Federal statute requires the filing of a claim to 35 days from the seizure. After that, you cannot regain your property.
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Surely you mean the moron with Insightful mod?
Talking about morons with mod points - I just wanted to moderate your posting but mis-clicked, moderating it as 'redundant'.... Oops.
Only thing I can now do is make a post in this discussion too, eliminating my own moderation.
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note the temperature sensor in there
That looks like 9 temperature sensors. If this is a grow op, then it is probably being used as corroborating evidence.
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you can't piss on somebody's leg by making your own money system
Why not? This isn't the first time, it's happened many times before, arguably trading gold for the first time was doing exactly that. Then making notes backed by gold was doing it again, then making currency backed by nothing was doing it one more time. I would argue Nintendo Points [wikipedia.org] are their own form of currency - granted a highly regulated one - that Nintendo created. I would totally do a small amount of work for some Nintendo points to b
Public Record (Score:5, Funny)
They'll have to enter the hash into the court records as evidence.
Nothing new. (Score:5, Funny)
They'll have to enter the hash into the court records as evidence.
Nothing new. I'm sure hash has been on record as evidence in drug cases before.
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Nothing new. I'm sure hash has been on record as evidence in drug cases before.
I can't wait until someone cracks their records.
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Who Cares?? (Score:2, Insightful)
Why is every minutiae associated with Bitcoin posted on the front page here?
This is not news for nerds. Criminals will always look for ways to hide money, whether it is in hard cash, diamonds, or even bitcoin it is not new.
Stop this nonsense now.
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Why is every minutiae associated with Bitcoin posted on the front page here?
Just like Linux, Bitcoin is the little man's fight against the big entities. I believe this is the reason.
Business models (Score:5, Interesting)
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don't be ridiculous, the $800+ is nothing, chump change. The DEA will not be able to finance itself taking small amounts of bitcoins.
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Of course not. They take the smaller amounts for spite when they don't get the big bux they were hoping for.
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that's not how the War on Drugs makes money, the kind of operations talked about in this article are paid for with tax dollars, not confiscated goods. The big bucks in the War on Drugs would be big pharmy, illegal CIA/armed forces working with drug lords (e.g. afghanistan), the prison system business, the "defense contractors" who outfit DEA and other statsi with gear
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of course. They get to use other people's money to cover operation costs and use the confiscated money for the hookers'n'blow fund.
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sometimes the tax dollars go for that too.
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Can they even prove where the bitcoins came from?
The sad irony is even if they cannot, the burden of proof is now on their former owner. If he takes the time, money, and council to prove these assets didn't come from nefarious activity, well, he'll likely be in the red recovering his eight hundred and change.
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Theoretically they can. The Bitcoin network keeps the history of transactions. But to check that they needed to seize the coins. It's not just money, it's evidence.
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Ahh the joys of self-financing government departments. "We believe those assets were used in connection with a crime". Suddenly, they don't have to prove anything, they just have to seize it and it's theirs. Nice and convenient. Can they even prove where the bitcoins came from?
As someone who's dealt with seized assets before (not for myself, for another employee in a previous job), "seizing" does not mean it's "theirs", unless you've been watching too many crime dramas on TV.
The seized assets have to be proven to be used in a crime as part of a conviction, otherwise they are returned. In our case, the seized assets were returned to us after the trial. The only catch was we archived everything that was seized in case additional evidence was needed later.
Only in Hollywood does the
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No, proof is not necessary. That statute uses "a preponderance of evidence" as the bar in forfeiture cases, which is a much lower burden to establish. You also must file a claim within 35 days to contest the seizure before it is permanent, and you must do so at your own cost. For amounts 4 figures or less, the cost of filing a claim will amount to more than the value of the seizure.
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How to make money selling drugs. (Score:5, Interesting)
Anyone under the misapprehension that the drug war is about catching scum bag drug users or dealers should watch this excellent documentary:
http://www.imdb.com/title/tt1276962/ [imdb.com]
You'll learn who the really big players are. Hint: it's not who you think it is ;)
Peace,
Andy.
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And featuring prominently in the credits is 50 cent.
This documentary just lost all credibility with me.
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And featuring prominently in the credits is 50 cent.
This documentary just lost all credibility with me.
I bet he'd feel the same way about your slashdot comments, if he had any idea who you were, or what slashdot was.
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FYI 50cent is the rapper that sued 'Hanzis matter' for accurately reporting that the Chinese character 'Mad Flow' tat on his shoulder actually reads 'Crazy Diarrhea'.
He's no more relevant then Streisand.
Actors/Muscians politics need to be ignored.
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There's some truth in those. Not the pharmaceutical industry part, but the others.
US prisons are largely privately owned for-profit facilities. As might be expected, this means they put a little effort as possible into rehabilitation. To them, a repeat offender is a repeat customer - rehabilitation costs too much money, and does nothing to turn a profit. This also plays well politically - votes are easily gained by a show of being 'tough on crime' and casting the criminal population as demons to be hunted d
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Can we at least make sure stuff is adequately summarized before it hits the front page?
As already said, you must be new here.
For the record, it was in South Carolina.
Umm, what the heck? When a name like "Charleston" is just given without any other qualifier, it's obviously referencing the most well-known city with that name, i.e., the one in South Carolina.
Given that the "U.S. Drug Enforcement Administration" is explicitly mentioned, the summary automatically rules out your localities in Australia, Canada, New Zealand, and the UK, so listing those as possible interpretations of the summary is ridiculous and ignorant.
And while,
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I live close enough to the Charleston in TN that I have gotten used to checking whenever the word comes up without more info.
You, yourself admitted that at least one item on Kr1ll1n (579971)'s list was reasonable.
Other people are even now pointing out that what you claim was obvious is not obvious.
I supect you'll be surprised how many people who don't live in the US also don't find ANYTHING about which Charlston is largest obvious, and in fact you'll probably hear from people who only know of a handfull of
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Given that the "U.S. Drug Enforcement Administration" is explicitly mentioned, the summary automatically rules out your localities in Australia, Canada, New Zealand, and the UK
How quaint, assuming that U.S. laws and U.S. Law Enforcement still stay within U.S. borders.
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Can we at least make sure stuff is adequately summarized before it hits the front page?
:D
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and it will only have been there once.....
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Original Story from Let's Talk Bitcoin! (Score:2)
The first of its kind (Score:2)
>11.02 Bitcoins worth $814
In a case believed to be the first of its kind, the reported "street value" of the Bitcoins seems pretty accurate.
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it's friggin 814 bucks. well, tomorrow it might be something else, if it goes down are they going to charge him with tampering of evidence..
on the other hand, them consulting someone to tell them what a bitcoin wallet is was probably more than 814 bucks.
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the wallet of course.. they can't exactly just go on selling evidence.
or admitting that bitcoin = cash. because if they sold it they would have to argue that is exactly equivalent.
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Police auctions are commonplace in the US. So are accusations of police stretching the grounds for seizing assets so they can have more to sell.
In the case of bitcoins, there is nothing stopping the coins being sold once the case is over - but there is a strong possibility that word will come down from the higher levels of government, concerned that a government sale of the coins could be interpreted as an 'endorsement' of the currency. If that happens, the wallet will be simply deleted (removing the coins
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As the sibling post said, they don't. But unlike cash, Bitcoin are extremely divisible (you can send 0.00000001 BTC to someone), so the same practical problems (not having enough coins and bills to pay for things) don't really apply.
There are economic consequences of having a fixed supply, of course, but that's a different issue.
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They are lost forever. That's not as big an issue as it might seem (except for the owner) for reasons which have been explained to death elsewhere.
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The coins vanish. They aren't replaced. Fortunately they are also highly divisible. Extreme deflation is to be expected. This makes economists rather annoyed - inflation, the bane of savers, is required for the proper functioning of an economy. This isn't really an issue with bitcoins (yet) because they are primarily used as a medium of exchange rather than as a value store. No-one asks for a loan in bitcoins, or makes an investment longer than a few days.
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the wallet of course.. they can't exactly just go on selling evidence.
or admitting that bitcoin = cash. because if they sold it they would have to argue that is exactly equivalent.
Seized non-currency assets are sold all the time. Ever see those ads for government auctions of seized vehicles?
sure, after they have been used as evidence.
though no, never seen an ad for those. only in simpsons.
and this is still alleged, so I don't think they sold them yet.
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I wonder if the DEA transferred the money to own of its own accounts, or if they merely seized a drive that contained the wallet.
If the latter is the case, I wonder what will happen if there's a copy of that wallet, that now starts sending money. That'd be one hell of a way to accuse the DEA of fraud with seized goods...
Well, to transfer the money they'd have to have access to the wallet in any case. Maybe the Bitcoins weren't actually in his possession (for example, they might be deposited in some external party's account that they can demand them from).
If they actually got access to the wallet by seizing his hard drive, then that is something that could be defended against. Just have a backup with enough coordination so that if the computer is seized the money gets immediately transferred someplace safe. The wallet th
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In any case the government can force you to hand over the keys by law. You can sit in a cell until you do in some countries.
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Usually in such systems the password is optional. Even if one is present it may not be strong enough to present much of a barrier to brute force and even if it is strong enough to stand up to brute force it may be possible to obtain it through either coercion (make him sit in a cell till he reveals the password) or subterfuge (put a keylogger on his machine).