DOJ Hasn't Actually Found Silk Road Founder's Bitcoin Yet 294
Techdirt has an interesting followup on the arrest and indictment of Silk Road founder Ross Ulbricht, in connection to which the FBI seized 26,000 or so Bitcoins. From the Techdirt piece: "However, in the criminal complaint against Ulbricht, it suggested that his commissions were in the range of $80 million -- or about 600,000 Bitcoins. You might notice the disconnect between the 26,000 Bitcoins seized and the supposed 600,000 Ulbright made. It now comes out that those 26,000 Bitcoins aren't even Ulbricht's. Instead, they're actually from Silk Road's users. In other words, these were Bitcoins stored with user accounts on Silk Road. Ulbricht's actual wallet is separate from that, and was apparently encrypted, so it would appear that the FBI does not have them, nor does it have any way of getting at them just yet. And given that some courts have argued you can't be forced to give up your encryption, as it's a 5th Amendment violation, those Bitcoins could remain hidden -- though, I could see the court ordering him to pay the dollar equivalent in restitution (though still not sure that would force him to decrypt the Bitcoins)." The article also notes that the FBI's own Bitcoin wallet has been identified, leading to some snarky micropayment messages headed their direction.
Disappearing Bitcoins (Score:5, Interesting)
This brings up an interesting thought. Since the total number of Bitcoins is fixed, and if these coins seem to now be irrecoverable, what happens to the currency when it disappears into encrypted black holes like this?
Lost forever? (Score:4, Interesting)
Now imagine that this Ulbright ends up in jail, or dies, the keys to this encrypted wallet are lost, and with it these 600,000 bitcoin are lost. I think this is a pretty realistic scenario.
Now what consequence would this be for the bitcoin as a currency, when a significant chunk of its coins are taken our of the equation? It's about 5% of the current total number of almost 12 million bitcoin in existence (and 3% of the theoretical maximum of 21 mln). And bitcoin can not be recreated or added to, like a regular currency.
Another thing of note, is that apparently a single bitcoin user managed to amass 5% of the total number of that currency in existence. Those numbers potentially give that person massive market power: dumping them all on the market in one go would cause the value of bitcoin to crash. Smaller quantities have that potential already.
Re:Restitution? (Score:2, Interesting)
You think all the roofies and heroin bought on silk road were consumed by the buyer?
Minor details! (Score:5, Interesting)
in the criminal complaint against Ulbricht, it suggested that his commissions were in the range of $80 million -- or about 600,000 Bitcoins.
Yes, and given how badly he managed his assets, I doubt even a fraction of this will be recovered. He was not a very good businessman, his servers weren't very well secured... in fact the only thing in the "had lots of" category with this guy was ego. I mean really... "Dread Pirate Roberts"? And have you seen some of the things he wrote on this website of his? "I'll take as much of your money as I want because this is my ship. If you don't like it, fuck off." -- It's actually included in the criminal indictment against him, along with a laundry list of, shall we say, personality shortcomings of his leading to other elements of the criminal underground coming by to explain all meanings of the word "respect" to him, and then him blowing tons and tons of money either paying these people off, or trying (pathetically) to put hits out on them.
If there's one charge I could add to the indictment, it would be criminal stupidity.
It now comes out that those 26,000 Bitcoins aren't even Ulbricht's. Instead, they're actually from Silk Road's users. In other words, these were Bitcoins stored with user accounts on Silk Road.
Technically, they were for purchases pending. Silk road worked by letting you transfer coins into a silk road proxy account. It ran every submission through its "tumbler" to randomize which coins were actually used for which transactions. So what was seized was basically the day's take out of the register, as it were.
Ulbricht's actual wallet is separate from that, and was apparently encrypted, so it would appear that...
That he'll be charged as a terrorist and sequested in a room somewhere to be beaten with a metal pipe or waterboarded until he gives up the password. Has anyone heard from him lately?
And given that some courts have argued you can't be forced to give up your encryption, as it's a 5th Amendment violation...
We'll just create a new court especially to prosecute terrorists like him extrajudicially. Oh wait... we already did.
The article also notes that the FBI's own Bitcoin wallet has been identified, leading to some snarky micropayment messages headed their direction.
Taunting the police has historically worked out quite well for criminals. Dude, you aren't anonymous. You basically just signed your own search warrant.
Re:Money for his defense (Score:2, Interesting)
Will be interesting to see which lawyer will step up and take cases on behalf of Europeans and other countries where purchasing pot is legal and demand the return of their clients funds as no laws where broken by their clients.
Going to be a great cutting edge tech case for some lawyer to raise their profile.
There is also the potential for people who opened an account, loaded up bitcoins, but never made a transaction for illegal products (though intent might get murky) however there are/were legal products that could be purchased on SilkRoad so could still get away with it....
Thoughts about USA based law enforcement overstepping their jurisdictional grounds for non usa citizens?
Going to be interesting to see what happens once the FBI returns the bitcoins to the market to dispose of the assets.
Re:Power of attorney transfer them from his wallet (Score:4, Interesting)
If he has secured his private keys, then nobody can touch his Bitcoins. Not the NSA, FBI, CIA...
I've heard people say that the NSA can decrypt various things that are thought to be impossible (in reasonable time). Even if that were true, I doubt they are going show their hand and remove all doubt over something as trivial as this, so i think you are correct.
While he still has access to his bitcoins, they can argue that they should be allowed to force him to give up his keys. If he no longer has access to his bitcoins then they can't, so there is an advantage to him putting them somewhere where he can't get them. He'd need to find someone he can trust though...
Re:Disappearing Bitcoins (Score:4, Interesting)
You've never seen code at a financial institute, have you?
Yes, there have been scams based on rounding decimals. No, these were not due to rounding errors or any other kind of technical error with floating point calculations, but due to the fact that currencies display a limited amount of decimal places whereas some calculations may produce more decimal places. Instead of rounding off and dropping the difference, the scam was to round off and transfer any positive difference to the thief's account. The problem is fixed nowadays by rounding off to the advantage of the customer at a relatively minor loss to the banks; there simply isn't any positive difference to transfer.
FYI, I've worked some 12 years at various banks and had to deal with these rounding issues. These fixes were put in place decades before I started my carreer.
The "greatest financial scams of our time" are based on social engineering, not technical engineering.
Re:Disappearing Bitcoins (Score:5, Interesting)
Deflation just makes the idea of investing seem absurd. That may be no way to run a country, but it's a perfectly fine way to run a sub-currency. Collectables behave exactly like bitcoins, and they haven't destroyed the economy yet.
Re:Money for his defense (Score:5, Interesting)
That is an actual cool feature of Bitcoin - you can copy money. You can only spend it once, but you can have a backup copy of your money. Or several.
Re:Disappearing Bitcoins (Score:5, Interesting)
Economists regard price deflation as bad: That's when costs for businesses and debtors go up, without a corresponding increase in revenue. Businesses fail left and right under this situation.
Bitcoins, not now, but in the future, will have the property of monetary deflation, which is good: Prices go down uniformly and predictably.
The key thing to keep in mind is that, if the future effects are predictable, that'll be reflected in the price now, minus interest for the price of time.
(Monetary inflation may be predictable in many cases, but it's still damaging because it's not uniform: It benefits banks and the politically well connected with new money, letting them bid up prices, effectively stealing wealth from savings and those on fixed incomes.)
Also for a lot of things (Score:5, Interesting)
Public defenders are a good choice. I know that there's this Hollywood cliche that public defenders were C students that are worthless and don't know what they are doing but that isn't usually the case. Many of them are quite passionate about what they do, and good at it. Also they have a lot of trial experience, which is something that private attorneys often don't. Knowing the law and being good at trial are different things and public defenders get a lot of trial time. Plus they have experience with criminal law, since that's what they do. They don't spend time messing with estate planning or shit like they, they defend criminal cases.
So depending on the charge, the area you are in, etc, etc a public defender can actually be good, maybe even the best, option. They may have a better handle on the law and be better at trial than a private lawyer.