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Bitcoin The Courts

Feds Moving Quickly To Cash in on Seized Bitcoin, Now Worth $8.4 Million (arstechnica.com) 151

A federal judge in Utah has agreed to let the US government sell off a seized cache of over 513 bitcoins (BTC) and 512 Bitcoin Cash (BCH). At current prices, that would yield approximately $8.4 million for the bitcoins and nearly $1 million for the BCH. From a report: In a court filing, prosecutors noted that due to the volatility of the Bitcoin market, both coins risk losing value. Both the BTC and the BCH have already been transferred to government-controlled wallets. The new round of seized digital currency belonged to a Utah man named Aaron Shamo, whom prosecutors say led a multimillion-dollar ring of counterfeit pharmaceuticals, including oxycodone and alprazolam that were sold on Dark Web marketplaces. Shamo was arrested over a year ago -- his trial has not yet been scheduled. On Tuesday, US District Judge Dale Kimball allowed the sale to proceed. Once sold, the money would go to an account held at the Treasury Executive Office for Asset Forfeiture.
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Feds Moving Quickly To Cash in on Seized Bitcoin, Now Worth $8.4 Million

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  • by Anonymous Coward on Friday December 15, 2017 @01:46PM (#55747079)

    America, land of the free, and you have RIGHTS... HA HA HA! Meanwhile we will steal your stuff and sell it, putting it into the government's pockets, before you are even convicted of the crime. What good do your guns do you now to defend against tyranny?

    • by mysidia ( 191772 )

      America, land of the free, and you have RIGHTS... HA HA HA! Meanwhile we will steal your stuff and sell it, putting it into the government's pockets, before you are even convicted of the crime.

      If they sell AND he's found innocent, AND Bitcoin rises in price to $1 Million US per Bitcoin.... he should get the full $513 Million back plus interest, OR sue their arses off.

      • More likely scenario is that bitcoin crashes to nearly nothing by the time he's found innocent, so when he gets his $8 million back from the gov't (instead of worthless bitcoins) he will be a happy camper.

    • Re: (Score:2, Informative)

      by Xylantiel ( 177496 )
      While I don't really like asset forfeiture rules generally, for this guy it looks like the trial is basically just figuring out how many life sentences he will be serving. The judge did have to sign off on this, the cops couldn't do it all by themselves, that's the due process. This guy is accused of running a business making fake pills. That kills people about as sure as if he were shooting at random buildings.
      • "that's the due process"

        He has a right to a speedy trial. It doesn't matter what he's accused of, they didn't give him a speedy trial instead they held him for a year without due process and the state holding people without due process is a MUCH bigger crime than shooting at random buildings.
        • by unrtst ( 777550 )

          He has a right to a speedy trial. ... they didn't give him a speedy trial instead they held him for a year without due process...

          Being held for a year while awaiting for the trial to be scheduled does not necessarily mean that his right to a speedy trial was violated. There are a variety of exclusions (ex. delays due to motions filed before the trial, which, I think, could come either party).

      • by rtb61 ( 674572 )

        Innocent until proven guilty, kind of stops right there. They are factually stealing assets from an innocent person and crime against the US constitution for which the victim now has the right to seize all US government property?

      • What greater symbol of the courts' brutal power-drunk overreach than the habit of sentencing the condemned to multiple life sentences. It recalls the image of a deranged killer, shooting his victim's lifeless body over and over again, all the while maniacally cackling.

    • If anything, they did him a favor. Sell it off before the value crashes. Then if he's innocent, he gets a lot more money than if it was kept in BTC/BCH.

      • If it crashes and he's found innocent, and they bother to return his property at all, they'd just buy him new, cheaper bitcoins.

    • Yup, it's sketchy enough that Regan era drug war policies letting police steal the property of someone who has committed a crime related to drugs are still in affect (seems to conflict with the accused being able to pay for their defense for starters) but now you can sell their property out from under them?

      If you accuse me of a crime and steal my house then sell it out from under me while I await trial I'm going to be pissed. I don't even care if the price went DOWN in the meantime and you give me more mone
    • In Soviet America, everyone has the right to a speedy trial.

  • .. that government servants are able to cash in on their seizures like they earned the money. It should rightfully be destroyed, or returned directly to taxpayers via a refundable credit.

    • The reason is to counterbalance the effects that using the stash to bribe them would otherwise provide, but it does seem a little mercenary and certainly has deleterious effects with civil forfeiture.
    • I would like to see seized assets either be applied directly to the national debt or donated to charity. I would even be ok with the local police department deciding which 501c3 to donate it to but in no ways should they be allowed to directly benefit from either seized assets or fines.

      • I would like to see seized assets either be applied directly to the national debt or donated to charity. I would even be ok with the local police department deciding which 501c3 to donate it to but in no ways should they be allowed to directly benefit from either seized assets or fines.

        Why do you libs all hate the first responders?

        • by Wycliffe ( 116160 ) on Friday December 15, 2017 @02:24PM (#55747409) Homepage

          I'm not a liberal. I don't hate the first responders. I just don't think the seized money belongs to them. It doesn't seem like "finders keepers" should apply when the are paid by tax dollars to do the finding. There is also a significant conflict of interest when they are allowed to keep what they find. Spending drug money on drug rehab programs or some other way that directly benefits society seems fairer.

        • Not sure if sarcastic... but you should that eliminating corruption and temptation is helping first responders.

          Take the drug war. If it were eliminated, violent crime would be significantly reduced, along with 90% of the no-knock raids. Protects the first responders. Literally everyone wins, except drug dealers and the DEA administration.

          Eliminating profit from seizures would disincentivize performing seizures. Fewer seizures mean fewer raids, and less risk to first responders.

          If they need more money, r

          • Take the drug war. If it were eliminated, violent crime would be significantly reduced, along with 90% of the no-knock raids. Protects the first responders. Literally everyone wins, except drug dealers and the DEA administration.

            Don't tell me, tell all the jackoffs who voted for and support Donald Trump.

            https://www.vox.com/policy-and... [vox.com]

            https://www.theguardian.com/us... [theguardian.com]

            • by Holi ( 250190 )
              That sounds like a tremendous waste of time to be honest.
        • "Why do you libs all hate the first responders?"

          Maybe we just think the people we trust to protect the innocent from criminals and the crimes of false arrest and prosecution shouldn't have a financial incentive to falsely arrest and prosecute people.

          We have a tax system, whether you agree with the system as it stands or not it is our societies best effort to charge the public for public services in a fair manner. There should be precisely zero other ways we pay for public services.
          • Maybe we just think the people we trust to protect the innocent from criminals and the crimes of false arrest and prosecution shouldn't have a financial incentive to falsely arrest and prosecute people.

            Don't tell me. I'm not seizing anyone's property.

            Tell it to the Trump Administration.

            http://www.foxnews.com/politic... [foxnews.com]

        • Why do you libs all hate the first responders?

          I"m pretty far away from being a liberal, and I pretty much agree with the OP.

          Allowing the entity that can arrest and charge you with something allowing them to seize valuable assets from you, seems quite dangerous if they are to directly benefit from them.

          I mean, there is 100% incentive for them to try to charge someone just to get money. That is seriously dangerous. And it isn't like we've never seen a crooked cop or politician, right?

          So, I would also lik

          • Allowing the entity that can arrest and charge you with something allowing them to seize valuable assets from you, seems quite dangerous if they are to directly benefit from them.

            Of course you're correct. I just find it funny when people who support the Trump administration complain about police seizures. The current administration has made it clear that they want to increase such seizures.

            https://www.washingtonpost.com... [washingtonpost.com]

            http://www.foxnews.com/politic... [foxnews.com]

    • by Anonymous Coward

      The part that's crazy to me is that the dude hasn't even had a trial yet and they are already liquidating his assets. Currently, he's innocent. They are selling off an innocent man's property. That's wrong.

      • by Anonymous Coward

        When has the government ever cared about right and wrong?

      • by rogoshen1 ( 2922505 ) on Friday December 15, 2017 @02:42PM (#55747573)

        civil forfeiture is theft, plain and simple.

        the idea that YOUR ASSETS are on trial, and you have no standing is absolutely fucking weapons grade bonkers.

        • civil forfeiture is theft, plain and simple.

          the idea that YOUR ASSETS are on trial, and you have no standing is absolutely fucking weapons grade bonkers.

          On the other hand, it's probable that the guy bought/acquired the Bitcoins as a result of selling bogus drugs. If so, those assets were obtained unlawfully. However, if he's acquitted or he can prove they were obtained legally, he can petition to get his property back. One can argue about the wisdom of selling the Bitcoins now -- they could continue to increase in value -- but, in any event, the guy or Government won't lose money should their value decline or, more likely, Bitcoin crashes.

          Aaron Shamo, whom prosecutors say led a multimillion-dollar ring of counterfeit pharmaceuticals, including oxycodone and alprazolam that were sold on Dark Web marketplaces.

          • by mysidia ( 191772 ) on Friday December 15, 2017 @03:26PM (#55747845)

            they could continue to increase in value -- but, in any event, the guy or Government won't lose money

            The 5th amendment demands just compensation for the taking of private property for use by the government.

            ONE of the rights you have as owner of property is the right to control and direct the Timing of when and if you sell it or convert it into US fiat, based on your expectation of what the market price will be.

            So if it DOES continue to increase in value sufficiently, then the guy could make the claim he intended to HODL the coins and be due $10 Billion US, the cash equivalent, if for some reason the government's unable to return his property in the same condition as they found it, or if it DECREASES in value, then the guy could claim he intended to sell and thus demand PROPERTY + Compensation for his loss caused by the government interfering with his rights to direct regarding the disposition of his property.

            • if for some reason the government's unable to return his property in the same condition as they found it, or if it DECREASES in value, then the guy could claim he intended to sell and thus demand PROPERTY + Compensation for his loss caused by the government interfering with his rights to direct regarding the disposition of his property.

              And if that's the gamble, I'm pretty sure they picked correctly.

            • That and they've held him for a year without trial, even if it did crash he has the right to sue them for the lost opportunity to sell before the crash.
              • That and they've held him for a year without trial

                In all these cases it is the defendant (and their lawyers) who must agree the right to a speedy trial be waived. It is usually in the defendant's own best interest.

                In most cases prosecutors have all the cards and are prepared with ally they need when they finally press charges. They are more than willing to move to a trial immediately before the defense has time to gather all they need. The government usually spends months preparing these cases so they're certain that (right or wrong) they can get a conv

                • by Agripa ( 139780 )

                  That and they've held him for a year without trial

                  In all these cases it is the defendant (and their lawyers) who must agree the right to a speedy trial be waived.

                  No, not all of them and the courts support various ways to coerce the defendant into giving up their rights.

                  https://www.newyorker.com/maga... [newyorker.com]

                  June 23, 2011: People not ready, request 1 week.
                  August 24, 2011: People not ready, request 1 day.
                  November 4, 2011: People not ready, prosecutor on trial, request 2 weeks.
                  December 2, 2011: Prosecutor on trial, request January 3rd.

          • The problem with this rationale is that it is the Prosecution who asserts that this is probably ill-gotten wealth, often using the successful acquisition of an indictment as proof of probable cause for seizure. Once they get a judge to agree, assets are seized.

            In the US justice system, money improves outcomes for defendants. Now the defendant cannot use those assets to pay for a defense. This is fine if the assets ARE proceeds of crime, but what about when they aren't?

            The defendant has not yet been prove

          • "On the other hand, it's probable that the guy bought/acquired the Bitcoins as a result of selling bogus drugs. If so, those assets were obtained unlawfully. However, if he's acquitted or he can prove they were obtained legally"

            In our system the accused are innocent until proven guilty. You've defined a system of assuming he is guilty until he manages to establish otherwise. In this case he has been held a year as an assumed innocent, that violates the six amendment so it really no longer matters if they co
    • It seems pretty foreign to me that they can do whatever they please with the property of someone whose trial hasn't even been set yet.

      • It seems pretty foreign to me that they can even seize property of someone who's been convicted.
    • Seriously? They get to personally pocket the dosh?

      I'm in a kind of uncanny valley, because it's so retarded it shouldn't be true, but some retarded things actually are.

      Do they have to give it back if (unlikely, I know) he's found not guilty?

      • Do they have to give it back if (unlikely, I know) he's found not guilty?

        Nominally they do. But I have read a lot of cases where it has proved very hard to get your property back after a civil asset forfeiture action.

        This happens a lot in smaller actions, not where millions of dollars are at stake. Somebody gets their door kicked in on suspicion of something or other, they often gather up all computers and files. Cars and other vehicles. It can take months if not years to get it back after the prosecution has been dropped and often it isn't in good shape when returned.

        Civil

      • Seriously? They get to personally pocket the dosh?

        Sure, if you work at the Treasury and your name is Asset Forfeiture.

        Once sold, the money would go to an account held at the Treasury Executive Office for Asset Forfeiture.

        • Well no actually, if you work for anyone who provides paychecks checks covered directly or indirectly by the treasury you get to pocket it.
        • >> Once sold, the money would go to an account held at the Treasury Executive Office for Asset Forfeiture.

          Through a process called revenue sharing, a portion of these dollars (>80%) can flow back out of the treasury and into the state or local law enforcement agency that executed the seizure.

          If that sounds fundamentally wrong and rife with the opportunity for abuse, congratulations. It appears you are paying attention.

      • Typically, the organization that did the seizing gets to keep it. This motivates a lot of the roadside vehicle searches by sheriff's deputies and highway patrol officers. These guys often seize cash in the $5,000 - $10,000 range. This money stays in their local department, and because it is not from a budget line-item, they are generally allowed to spend it on whatever they want, like espresso machines and video-game consoles for the break room. The former owners of this money will struggle to get it bac

    • Well hold on to your hat because you're about to be blown away by what I'm about to say: It's not going to government servants! That's right! It's not! It's actually going to the Treasury, it's right there in the summary!

  • What if it goes up? (Score:1, Interesting)

    by Anonymous Coward

    They're going to sell off seized assets before the trial has even been scheduled? What if the value goes up and he's acquitted? Will taxpayers be on the hook for the difference when he goes to collect his property?

  • "Feds Cash In BitCoin." A title like that, carried by enough outlets, just might ignite the "correction".

  • No Trial? (Score:5, Funny)

    by skipkent ( 1510 ) on Friday December 15, 2017 @02:03PM (#55747231)

    "Shamo was arrested over a year ago -- his trial has not yet been scheduled."

    I'm glad the Framers added the right to speedy sale of BTC, but they could have also added one for trials.

    • Re:No Trial? (Score:5, Insightful)

      by sl3xd ( 111641 ) on Friday December 15, 2017 @03:43PM (#55747973) Journal

      I'm glad the Framers added the right to speedy sale of BTC, but they could have also added one for trials.

      It could be his defense team requesting the delay.

      Civil forfeiture is used for nearly every drug crime prosecuted (not convicted -- prosecuted). The process goes all the way back to the US prohibition on Alcohol. The chemical substance may have changed, but the process is the same: Property is seized during "drug" activity, the Police get the assets to buy equipment, facilities, or salaries.

      It's one reason you never travel with a large amount of cash in the US. In some states, police can often just claim "we have probable cause that the cash is drug money" and seize it. Zero recourse.

      Richard Thornburgh, Reagan's attorney general, said:

      It's now possible for a drug dealer to serve time in a forfeiture-financed prison after being arrested by agents driving a forfeiture-provided automobile while working in a forfeiture-funded sting operation.

      Many politicians love the idea - make the police self-funding by letting the Police keep seized assets, and then cut taxes.

      What could possibly go wrong when the Police are financially motivated to seize property, and don't need to convict the owner to seize it?

  • Makes sense to me (Score:3, Interesting)

    by ErichTheRed ( 39327 ) on Friday December 15, 2017 @02:03PM (#55747239)

    It makes sense that they'd try to convert this particular seized asset to cash ASAP. It's not mansions, paintings and a fleet of luxury cars...it's a highly volatile cryptocurrency. Turn it into cash, hold onto it until the trial and appeals are over, and you still have an asset worth something. If they wait and the bubble pops, they get nothing or a fraction of what they would get had they sold.

    • by nevermindme ( 912672 ) on Friday December 15, 2017 @02:15PM (#55747325)
      Or the other defendant is innocent, and the assert will be worth 10x the original value the day the judgement is made and the defendant cannot sue the government for the loss because the people choose to fuck with his investment strategy why pursuing an ill advised prosecution.. US dollars, 6 tons of guns, 12 cases of wine or half a ton of gold bars would remain unchanged, this is not a pile of cabbage that will rot away. Perhaps the government has no place in controlling someones assets that may have been generated outside of a crime. Outside of fraud and ponzi schemes, Perhaps defendants should be able to control the allocation of their liquid asserts until the case is rightfully decided.
      • by Anonymous Coward

        The problem isn't that the police seized the assets and prevented the defendant from routing them to other forms and uses pending the trial.

        The problem is that assets seized from a drug arrest can be auctioned and the proceeds given to the police department before there is a conviction that a crime even was committed.
        This means you can be arrested on a drug charge, and before the test comes back about whether those pills in your pocket were ibuprofen or crack, the police have sold your car and bought a new

        • This means you can be arrested on a drug charge, and before the test comes back about whether those pills in your pocket were ibuprofen or crack, the police have sold your car and bought a new set of hats for the whole department.

          It's far worse.

          They don't have to arrest you or charge you with any crime. They can (and often do) stop interstate motorists and seize cash/valuables, then send the motorists on their way with no arrests, no charges against the person(s) involved.

          They've created this legal fiction from whole cloth that inanimate objects break laws all on their own and can be charged with violating laws as if they were sentient, self-determining/self-willed, and aware. It would be totally laughable on it's face if it didn't

    • by RobinH ( 124750 )
      It could just as easily go the other way. If he's found innocent (unlikely perhaps, but possible) and the value goes up, doesn't that mean he gets it back? Wouldn't it be safer in that case to just return the bitcoins you seized, whatever their value?
    • On the other hand, volatility works both ways. If they fail to make their case then they owe Aaron Shamo his seized property back, 513 BTC and 512 BCH, plus whatever profit they realized on it while it was in their keeping, since that profit would naturally have accrued to the owner if they hadn't interfered.

      Selling now allows them to lock in the higher price in the event that they win, but also means that they stand to lose quite a bit if the price rises and they lose the case.

      • since that profit would naturally have accrued to the owner if they hadn't interfered.

        We don't know that the owner would have made the same choices. Wait till BTC crashes and re-buy 513 BTC / 512 BCH and return the same that was taken if he was proven innocent. Make a nice profit for the American people.

        • We don't know that the owner would have made the same choices.

          Doesn't matter. If they were able to turn a profit then it stands to reason that the owner could have done the same. Either way they are responsible for taking away that choice from someone they never proved guilty of any crime. Making their victim whole involves more than just the return of the original property; they have a responsibility to render the accused at least as well off as they might plausibly have become had the property never been seized.

          On the other hand, you appear to be suggesting that the

          • If they had seized US Dollars that could have been invested, they'll only return the same amount of US Dollars and probably without interest. By that theory, Bitcoin should be returned as-is, coin for coin - regardless of its relative value to some other standard.

    • The guy hasn't had his trial yet.
      What they should do is hold onto the seized assets. Return them to him if he is found not guilty, do what the law allows if he is found guilty.
      • These civil forfeiture [wikipedia.org] cases usually involve a suit against the anonymous assets, so most likely somewhere on some docket is "The United States vs some very long number".
        JESUS H FUCKING CHRIST ON A POGOSTICK YOU'VE ALL GONE GODDAMNED INSANE.
      • by sl3xd ( 111641 )

        What they should do is hold onto the seized assets. Return them to him if he is found not guilty, do what the law allows if he is found guilty.

        You clearly do not understand civil forfeiture. There are only three states which require conviction for forfeiture. In 46 states, if there's enough evidence to go to trial, your property is forfeit -- win or lose. (Many states require enough evidence for a search warrant to forfeit property -- and that's all.).

        If you are found innocent, your odds of seeing one red cent again are comical.

        Unsurprisingly, politicians are split two ways over the issue, and we get to vote for a candidate:

        * A candidate who will

    • That would make sense if this were an asset they owned. But it isn't. It's still his property, merely in their possession. The government is merely holding his seized assets in escrow until the trial is concluded. If he's found guilty, they are free to do with them as they please, but not until then. Imagine you were arrested and the government seized your childhood home because you were allegedly conducting illegal activities out of it. Imagine if after you were later found innocent, the government handed

    • If they wait and the bubble pops

      How about waiting until the person is found guilty before selling off his assets?

  • Remember when they sold the 700,000 BTC they seized from silk road for $13m? Good times...
    • On the other hand, if they tried to sell that much now they would single-handedly tank its value. Investors would panic, not knowing why so much is being sold.

      • That is what the market needs, honestly. The BTC deflation is out-of-control exponentially-irrational in a hyperbolic manner.
  • Both the BTC and the BCH have already been transferred to government-controlled wallets...

    ...after a thirty-day delay due to high Bitcoin network fees.

    • So the suspect either:

      1) didn't password protect his wallet
      or
      2) told the government his wallet password.

      I think we all know whose fault this is.
  • I can't say why this pops into my head while reading this article, but I am reminded of how the history of the federal bureaucracy includes times where they managed brothels in Nevada as an ongoing business after seizing them as part of tax enforcement action.

    I guess it is because for some reason it doesn't seem that the Feds have any business trading Bitcoins either.

    • by sl3xd ( 111641 )

      Until recently, Utah (the state in TFA) requires "dealers in possession of a controlled substance must purchase and affix drug tax stamps to the controlled substance." (Story covering the repeal [taxrates.com])

      Yes, some stamp collectors have been able to buy the stamps. Collectors that apply for them are given a complimentary and thorough in-home audit.

  • A market order of that size (which is relatively small) will drop the price around 5%, that should put things in perspective for people but it won't.

    Good thing this person: https://pineapplefund.org/ [pineapplefund.org] is altruistic because if they unloaded all of their bitcoin in a market order he would drop the price around 60%.

    People are going to get crushed when the bottom fall out of this thing. It's not going to be pretty.

  • Selling his 513 bitcoins? Isn't that like 8.4 million in dollars? Shouldn't they hold onto the 7.6 million instead? I mean, what happens if that 9.3 million in bitcoin is liquidated and the man is innocent? They'll have a hard time paying back that 6.7 million.
  • And I almost bought the house across the street from him. No, he didn't share. Rude.
  • " ...his trial has not yet been scheduled. " Soooo... what happens if he is never convicted, and the government has to return his assets? They no longer have the bitcoins, and if the price doubles between now and then, they would be out millions of dollars to repurchase them to return. And if they say, "Here is the original money we made of the bitcoins", he could rightly argue in court that he was not returned what was taken.
  • It'll be something dumb like this that sets of the big sell-off and crypto-crash.

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