FBI Seized 144,000 Bitcoins ($28.5 Million) From Silk Road Bust 162
SonicSpike writes "An FBI official notes that the bureau has located and seized a collection of 144,000 bitcoins, the largest seizure of that cryptocurrency ever, worth close to $28.5 million at current exchange rates. It believes that the stash belonged to Ross Ulbricht, the 29-year-old who allegedly created and managed the Silk Road, the popular anonymous drug-selling site that was taken offline by the Department of Justice after Ulbricht was arrested earlier this month and charged with engaging in a drug trafficking and money laundering conspiracy as well as computer hacking and attempted murder-for-hire. The FBI official wouldn't say how the agency had determined that the Bitcoin 'wallet' — a collection of Bitcoins at a single address in the Bitcoin network — belonged to Ulbricht, but it was sure they were his. 'This is his wallet,' said the FBI official. 'We seized this from DPR,' the official added, referring to the pseudonym 'the Dread Pirate Roberts,' which prosecutors say Ulbricht allegedly used while running the Silk Road."
Well (Score:5, Interesting)
They may have "seized" them, but unlike with physical property, how can they be sure they are "unspent" and still worth-ful?
What if, when they try to convert them to cash, they are told they've already appeared in the blockchain and have been "spent" elsewhere? Would that not be quite embarrassing? That, from under the noses of the FBI, someone has recovered all that money via an anonymous currency exchange and ran off with the proceeds?
I sincerely hope that they cash in the Bitcoins before something appears on the blockchain from that wallet. Double-spending is blocked, but that doesn't mean the FBI would be the first person to try to spend them. Especially not now they've put it on the news. Anyone could have a copy of that wallet.
Re:Here is my question.... (Score:3, Interesting)
The article states:
"The FBI official pointed me towards this Bitcoin address, which according to the public Bitcoin transaction record known as the “blockchain” received transfers of close to 144,000 in just the last 24 hours. “They finished moving them at 3am this morning,” said the official."
So no, they have already "spent" them by transferring them to another address. If they've already been spent then Bitcoin shouldn''t allow them to spent again from a "backup", otherwise it'd be worthless as a currency, you buy X from me with the coins, I send you X, then you can spend them again rom this backup depriving me of the value.
Was the FBI's seizure illegal? (Score:0, Interesting)
To move bitcoins you must spend money to transact them, about 2.5% is the transaction fee.
That's $625000 the FBI spent of that money, if not more.
Would that be illegal?
Re:Well (Score:5, Interesting)
They can either keep them in that account forever, basically useless to anyone...
Convert them to US dollars, just about the single most Bitcoin-legitimizing action I can imagine...
Or they can actually use them as Bitcoins.
The last one gets interesting, because the FBI has accidentally revealed their own current address by this large transfer to themselves. Bam, we have one "known bad" address. Anyone they trade with, then, becomes tainted by association. Would you trust, for example, a VPN service that has accepted payments from the FBI?
Re:Here is my question.... (Score:4, Interesting)
This is my real take-away from the article: DPR trusted nobody for important things that need trust and trusted many people for things that should not have had trust (e.g. doing co-lo in San Franscisco). He could have easily hired two(+) attorneys in foreign jurisdictions and had them combine the key parts in the event of his capture and transfer the funds to a legal defense fund. Obviously, he didn't or the FBI would have bupkis.
Trust needs to be managed, not avoided.
Re:Seized? (Score:4, Interesting)
The coins aren't in the wallet - they're in a completely transparent, publicly viewable account in the bitcoin block chain. Every transaction is visible to everyone. The wallet only contains the credentials that allow you to transfer the coins to another account. If the wallet was encrypted, and they were unable to access the credentials, then they cannot meaningfully seize the account since another copy of the credentials could (and should) exist elsewhere allowing someone else to spend the coins.
Given that according to TFA, the Feds have already transferred the coins to another account that they hold and that the transfers are a part of the current accepted blockchain, I would say that they have seized them. A side effect is that by revealing the blockchain entry for the transfers, they have marked these coins as government owned and traceable for the rest of their existence.
I wonder if it would be possible to also transfer the coins using a blockchain prior to the Fed transfer, then somehow replace the Fed transfer in the current blockchain and get the majority to accept the substitution, effectively denying the Feds their seizure? I realize that the majority design of Bitcoin is meant to prevent this sort of thing in reality, but it should be theoretically possible, right?
Re:No proof (Score:5, Interesting)
No, not even a little. Have you studied the technology? It's all pseudonymous, which is a completely different thing. Anybody who wishes to can completely monitor all activity on any account, the only anonymity resides in how well you hide the connection between yourself and your account number. Publish your account number publicly, like any legitimate business would do to accept payments, and there is no anonymity whatsoever, and every transaction past and present with that account is now known to be a transaction with that business. If you want to be anonymous then the onus is completely on you to make sure a link between your account number and your real identity is never discovered, the technology offers nothing in that regard.
Frankly, take away the gauze of anonymity and what you have is every financial analyst's wet dream of a currency - *every* transaction laid bare for all the world to see, in real time, and with a permanent record.