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Bitcoin The Courts

Ulbricht Admits Seized Bitcoins Are His and Wants Them Back 243

Posted by Unknown Lamer
from the good-luck-with-that dept.
An anonymous reader writes with the latest news about the aftermath of the Silk Road shutdown "From the article: 'Ulbricht ... said in a notarised December 11 statement that he believes the virtual currency should be returned to him because Bitcoins are "not subject to seizure" by federal law. Ulbricht, 29, now admits the Bitcoin fortune is his — even though he's previously denied any wrongdoing regarding Silk Road and claimed through his lawyer that the feds arrested the wrong guy.' So not only has he now confirmed his link to the site, and confirmed the money is his, but also means that a few precedents will be set. Is it seizable? Is it just 'copying data?'" Relatedly, three alleged moderators of Silk Road were indicted on Friday.
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Ulbricht Admits Seized Bitcoins Are His and Wants Them Back

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  • Yeah.... (Score:5, Funny)

    by P-niiice (1703362) on Tuesday December 24, 2013 @09:13AM (#45774645)
    I'm pretty sure I would have kept my mouth shut. The worst thing you can do is make it easier for the feds. But who knows, I've never been arrested on those charges and had a shitton of bitcoins seized.
    • He'll virtually be sentenced to bit-jail.

  • When one song is put online for illegal download, it's potentially worth $700k, still a lot more than one bitcoin, so I guess this is not "just copying".

  • Arrogance (Score:5, Insightful)

    by anagama (611277) <obamaisaneocon@nothingchanged.org> on Tuesday December 24, 2013 @09:15AM (#45774655) Homepage

    The foolish arrogance of geeks is sometimes astounding.

    • Re:Arrogance (Score:5, Interesting)

      by gbjbaanb (229885) on Tuesday December 24, 2013 @09:38AM (#45774753)

      indeed.

      I say - give him his bitcoins back, with a wimpy apology. And then refuse to allow him access to computers whilst he's in prison because of the computer-network related offences he just admitted to.

      And then imprison him more for evading taxes on his bitcoin income.

      • by onyxruby (118189)

        That's the rub, in claiming them he has admitted a massive tax fraud that could put him behind bars in prison for just as many years. Since the bitcoins are a product of tax fraud they could be seized on that basis alone. They won't give the bitcoins back though, because he could turn them over to third parties and use them to do things like put out hits on witnesses - the thing that they shut down his operation for in the first place.

        Remember it was taxes that did Al Capone in, everything else he had a han

        • by fnj (64210)

          Remember it was taxes that did Al Capone in, everything else he had a handle on, he just couldn't prove how he got his money through any means that was honest.

          And do you think we all should have to prove that we got our money legally? Please consider carefully. If so, do you think we should have to prove we are innocent if charged with a crime? (Hint: our Common Law legal system says no)

          Actually, Al Capone wasn't convicted for failure to prove that his money was gotten legally. He was convicted for not payi

          • by onyxruby (118189)

            The root of the issue goes back to he had income that he did not report. It was the lifestyle and assets he had which proved that he had income beyond his means. Without any conceivable legal means to use to show as proof to justify the lifestyle and assets he had he was nailed for the tax evasion charges. The point very much stands as I made it.

    • While I'd like to argue this could be a legal tactic suggested by a sentient attorney, your comment smacks of truth.

      There is a better probability my brother-in-law will leave Jennifer Anniston beneath the Christmas tree for me tomorrow than the Feds returning this seizure.

    • by medv4380 (1604309)
      What do you expect when hubris is considered a virtue?
  • Give them all to me!

    In all seriousness, I imagine the bitcoins are currently in a state of limbo - if the government were to spend them it could legitimise the new currency, something that would make a lot of officials uncomfortable. Most likely the wallet will be retained until the case is done and whatever legally mantained retention of evidence is passed, then just deleted, effectively removing the coins from circulation forever.

    • by jythie (914043)
      That does raise an interesting question.... seized assets are usually auctioned off, so what will become of this particular one? Are they even in a spendable form or is the wallet encrypted? If it is encrypted, can they force him to turn over they keys?
      • If it is encrypted, can they force him to turn over they keys?

        Sure they can. Wash Post [washingtonpost.com]

        This time the interrogator will be, surprise, another cop!

      • by jonbryce (703250)

        Seized assets that are legal to hold are auctioned off, things like cars and houses. Seized assets that are not legal to hold, such as inventory of drugs, are destroyed.

        • Do bitcoins qualify as 'assets?' While economically things are worth whatever people will pay, politically even selling them for cash could be problematic.

          • by jonbryce (703250)

            Yes they qualify as assets. They're certainly not liabilities.

            When the Feds bust a drug dealer, they might find an expensive car, and a large stash of heroin. They are certainly OK to auction the car, and certainly not OK to auction the heroin. Bitcoins falls in the middle somewhere. We don't know yet whether it is OK to auction them off.

            • by necro81 (917438)

              When the Feds bust a drug dealer, they might find an expensive car, and a large stash of heroin. They are certainly OK to auction the car, and certainly not OK to auction the heroin. Bitcoins falls in the middle somewhere. We don't know yet whether it is OK to auction them off.

              Heroin and other drugs have (street) value, and perhaps the government could get a pretty penny by selling them. The reason the government doesn't, moral issues aside, is because it's illegal to sell or even posses them, so there's

              • by jonbryce (703250)

                I agree that it is not illegal to possess bitcoin, however I am less certain that it is legal to sell them.

                For example, it is perfectly legal to possess a 401(k) pension plan, but unless you are appropriately authorised by the relevant authorities, you can't sell them. I suspect it is the same for bitcoins, except that it probably isn't possible to get the appropriate authorisations to sell them at the moment.

                • They are not a thing - you can't sell them. You are effectively selling a service - signing a particular transaction record with a cryptographic key. If this is an illegal service, then being a notary public is probably illegal too.

          • by mlts (1038732)

            What I wonder about is if the Feds have just the wallet, or access to the coins inside? This is similar to having a PGP encrypted file, versus the file and its decryption key.

            With just the wallet, the coins are pretty much taken out of the BitCoin ecosystem. With the wallet + access to spend coins, the coins can be considered usable assets for auction or spending.

            • by jonbryce (703250)

              For the bitcoins deposited by customers on the Silk Road website, they have access to the coins inside, and they transferred them to their own wallet. For DPR's personal stash of bitcoins, they only have access to the wallet.

              • by mlts (1038732)

                Thank you for the clarification.

                This poses an interesting item, and it might be something worth noting. Always have a backup of one's wallet, preferably in multiple places. This way, a loss of a machine doesn't mean the coins are lost forever to the aether.

      • by DaveV1.0 (203135)
        Moneys are not auctioned off. They are converted into U.S. dollars and added to various budgets.
      • They are spendable. They were spent (transferred) to the FBI.

  • So the piece describes it as an edgy argument, but what is his actual claim? Does anywhere go over why he believes BTC is not subject to seizure? Or is he just doing another variant of 'theft by government!' rant?
  • Seeing as you are going to have to prove how you got that much money worth of bitcoins, without tying your self to the criminal activity that went on thru Silk Road.

    I don't see him getting his bitcoins back, but I guess if he figures he's probably going to jail for Silk Road, there isn't any harm in trying to get his bitcoins back.

  • It's not as if he'd use it for anything bad like having people killed or anything. He's never done that before.

  • Still an idiot (Score:5, Interesting)

    by onyxruby (118189) <onyxrubyNO@SPAMcomcast.net> on Tuesday December 24, 2013 @10:46AM (#45775213)

    My opinion that the less than Dread Pirate Roberts is a massive idiot has now been reinforced in a way I never would have imagined. The demand is tantamount to the drug lord demanding the feds return the hundred million dollars that could only have come from selling 100 kilos of cocaine many times over.

    He hasn't got any possible legal pretense to justifying having the money and all it's going to do is prove his guilt. This idiot ought to look at the cartels and organized crime worldwide where they pointedly have this process called laundering money so that they can have at least have a pretense of legitimacy for their claims. No jury in the world is going to buy that this guy made tens of millions of dollars day trading bitcoin without a paper trail.

    I haven't seen a single thing about the silk road operation that did anything other than prove the man was an idiot from inception through the present day. Why the hell are people defending this guy, just because he ran a trading site for drugs? The people who were deluded into thinking they were safe on silk road are being arrested, the intelligence gained was an incredible coup and likely the only reason it lasted as long as it did until the guy started trying to trade bitcoins for murder.

    If you want to defend legalizing drugs, than make your argument for that, but don't defend one of the biggest idiots the Internet has ever seen.

    • Re: (Score:3, Insightful)

      by geekoid (135745)

      "The demand is tantamount to the drug lord demanding the feds return the hundred million dollars that could only have come from selling 100 kilos of cocaine many times over."
      no, there are many ways to make money. The feds need to prove the money came from selling drugs on the black market.

      "He hasn't got any possible legal pretense to justifying having the money"
      how do you know? Maybe he made it selling bitcoin high and buying them low.

      "No jury in the world is going to buy that this guy made tens of millions

    • I agree that he's an idiot, but maybe he's better off confessing guilt and going to court as a rich man than trying to maintain his innocence while poor? With access to those funds he can get an all-star team of lawyers and, worst case scenario, maybe a cell in one of those cushy white-collar jails.

  • I know this is off subject and feel free to mod me as such, but did anyone else that was not logged in while trying to view this story get automatically forwarded to the craptastic beta.slashdot.org site? I know it is only a matter of time before Dice forces that train-wreck on us but I would much rather not switch until I am forced to. I mean if I wanted to be Javascripted to death, or the likes I would go visit some God awful PHPNuke blog site! Thanks a lot Dice :P
  • Bitcoins are "not subject to seizure" by federal law

    Um, the fact that they were just seized, seems to refute that statement.

  • by Zontar_Thing_From_Ve (949321) on Tuesday December 24, 2013 @11:03AM (#45775309)
    Most people who have responded seem to not understand the legal argument here. Yes, this is risky to his case and basically he can't explain how he got the coins without hurting his own case. However, that's not the point. My guess is that he and his attorneys know that he is going to lose in court and go to jail. They are trying a novel argument that likely won't work that the government doesn't have the right to seize the coins no matter how acquired specifically because of their electronic nature. This is basically a low percentage "hail Mary" type play (to use an American football reference - look it up in Wikipedia if you don't understand it) to try to at least get him some income (and get his lawyers paid now) for when he gets out of jail. It's trying to turn the best case scenario into "Yeah, you're going to jail, but you'll still be rich when you get out". The unpleasant alternative is to say nothing, let the government keep the coins, and proceed with his weak defense that probably won't work anyway, in which case he goes to jail for a long time penniless. He's going to jail - the only question is whether this highly unlikely argument to keep the coins actually works and he at least gets to leave prison as a rich man. Anything can happen in a US courtroom, but I don't think this is going to be successful.
    • Where do bitcoins reside? Honestly, I know very little about bitcoins and everything that I look up leads me to believe that they reside in a virtual wallet on a PC. If this is true, then the feds can take the PC, thus taking the bitcoins on the PC.
    • by Tom (822)

      You've earned that +5.

      In addition, from everything you hear about the US prison system, having access to a shitload of money is probably a very good idea and could come in helpful for the purpose of securing a somewhat comfortable stay.

      You know, without new sexual experiences and all your bones remaining in one piece, etc.

  • Look, I am not a lawyer, this is not legal advise, but does this guy actually have a lawyer*? Would any lawyer make such a dumb argument?

    * If he doesn't, he sure needs one. Stat.

  • The last I read was that there was a raid of "live" bitcoin on the server for silkroad, but it was only a fraction of the total sum that DPR had control over. For all we know, the mother-lode is still somewhere in one or more locked wallets. If I had that much money in BTC wallets, I'd have locked backup on several places. I'd abandon all the unlocked BTC and get my backups taken care off by a trustee so I'd be rich when I got out of jail and my lawyers would get paid.

    I honestly can't think of any good re

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