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The feds just seized Silk Road’s $1 billion stash of bitcoin


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The feds just seized Silk Road’s $1 billion stash of bitcoin

Forfeiture comes two days after mystery party transferred 69,369 BTC out of wallet.

The feds just seized Silk Road’s $1 billion stash of bitcoin

On Wednesday, Ars reported that someone had transferred close to $1 billion in bitcoin out of a wallet likely associated with the Silk Road crime bazaar. Now we know who that mystery party is: the US Department of Justice, which in 2013 shut down Silk Road and went on to put its founder, Ross Ulbricht, behind bars for life.

 

“The successful prosecution of Silk Road’s founder in 2015 left open a billion-dollar question. Where did the money go?” US Attorney David Anderson said in a news release, according to the San Francisco Chronicle. “Today’s forfeiture complaint answers this open question at least in part. $1 billion of these criminal proceeds are now in the United States’ possession.”

 

Silk Road and Ulbricht were among the most popular and successful online crime figures in Internet history. Hosted on the anonymous Dark Web, the service brought together sellers and buyers of drugs, fake IDs, and just about any other kind of illicit good or service imaginable. There were thousands of dealers and "well over 100,000 buyers," US attorneys wrote in a civil complaint filed on Thursday. The complaint said that Silk Road generated revenue of over 9.5 million Bitcoin and collected commissions from these sales of more than 600,000 Bitcoin.

 

Thursday's complaint came five years after Ulbricht was convicted and sentenced to two life terms plus 40 years. The Internal Revenue Service Criminal Investigation arm assisted in tracking down the intricate scheme to obfuscate the recipients of the proceeds. The seizure came two days after blockchain analysts noticed someone had transferred 69,369 BTC—worth about $975 million—out of an account that had received them from Silk Road. The wallet, which remained quiet since 2015, was the world’s fourth biggest.

 

“Criminal proceeds should not remain in the hands of the thieves,” said Internal Revenue Service Criminal Investigation Special Agent in Charge Kelly R. Jackson in a news release, according to the Chronicle. “Through CI’s [Criminal Investigation] expertise in following the money, we were able to track down the illicit funds.”

 

 

The feds just seized Silk Road’s $1 billion stash of bitcoin

 

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The United States this week announced that it seized $1 billion worth of Bitcoin stolen by an individual from the Silk Road marketplace over half a decade ago.

 

The Bitcoin was seized on November 3 and two days later the U.S. filed a civil complaint to forfeit the funds, representing the largest seizure of cryptocurrency the Department of Justice has ever made.

 

Shut down in 2013, Silk Road was the largest black market bazaar for illicit goods and services. It served thousands of vendors and more than 100,000 buyers, and was also used to launder the funds derived from their transactions.

 

According to the civil complaint filed this week, the marketplace had roughly 13,000 listings for controlled substances at the time of takedown, and 159 listings for illegal services, including computer hacking.

Sales revenues on the portal are estimated at more than 9.5 million Bitcoins, while the commissions from these sales are believed to have been in excess of 600,000 Bitcoins.

 

The complaint also states that the marketplace was used to process Bitcoin transactions in such a manner that would hinder attempts to track them through the cryptocurrency blockchain.

 

Following his 2015 conviction on seven criminal counts, Silk Road creator Ross Ulbricht was given two life sentences. A Silk Road admin was sentenced to three years in prison last year.

 

Earlier this year, agents of the IRS CI were able to identify 54 previously undetected Bitcoin transactions associated with Silk Road, representing Bitcoin that was allegedly stolen from Silk Road in or about 2012 and 2013.

Approximately 69,471 Bitcoins (roughly $14 million at the time) were sent from multiple wallets to a single address, namely 1HQ3Go3ggs8pFnXuHVHRytPCq5fGG8Hbhx (1HQ3). While 101 Bitcoins were sent from the wallet, the remaining 69,370 Bitcoins remained there. As of November 4, the estimated value of the cryptocurrency is of more than $1 billion.

 

Following several hard-forks that Bitcoin went through, similar amounts of Bitcoin Cash, Bitcoin Gold, and Bitcoin SV were found in 1HQ3.

 

The funds, the complaint reveals, were stolen from Silk Road by an unnamed hacker, who did not spend the money, but didn’t return it either, despite being threatened by Ulbricht, who became aware of his identity. On November 3, the hacker, referred to by authorities as “Individual X,” handed custody of the Bitcoin address to U.S. law enforcement.

 

“Silk Road was the most notorious online criminal marketplace of its day. The successful prosecution of Silk Road’s founder in 2015 left open a billion-dollar question. Where did the money go? Today’s forfeiture complaint answers this open question at least in part. $1 billion of these criminal proceeds are now in the United States’ possession,” United States Attorney David L. Anderson of the Northern District of California commented.
 

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