US Government Seizes $1bn In Silk Road Bitcoins

The US Department of Justice has siezed more than $1 billion (£760m) in Bitcoin linked to the notorious Silk Road online black market, which was shut down in 2013.

The agency confirmed the seizure after crypto-currency watchers noticed the cache of about 70,000 Bitcoins being moved last week.

The action represents the largest seizure of crypto-currency in history.

“Silk Road was the most notorious online criminal marketplace of its day,” said US Attorney David Anderson in a statement.

Crypto-assets

“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. $1bn of these criminal proceeds are now in the United States’ possession.”

Industry watchers had speculated the currency move was the act of a Silk Road co-conspirator cashing out, or a theft by hackers.

The Department of Justice, however, said it tracked down the funds while tracing Silk Road’s finances in 2015.

The funds in question were stolen from a Silk Road Bitcoin account in 2012 by a person referred to as “Individual X”, investigators said. At the time the coins were worth about $350,000, analysts said.

The funds were moved again in April 2013 and lay dormant until Tuesday of last week, when the full amount was moved to a US government account.

The $1bn value is equivalent to the total value of all cash and cash equivalents seized by the federal government in 2015, the most recent year for which records are available.

Forfeiture

The government has filed a complaint, officially titled in part “United States of America vs Approximately 69,370 Bitcoin”, to prove that the funds are the proceeds of crime and are subject to forfeiture.

“Individual X was able to hack into Silk Road and gain unauthorised and illegal access to Silk Road and thereby steal the illicit cryptocurrency from Silk Road and move it into wallets that Individual X controlled,” the government said in its complaint.

“According to the investigation, (jailed Silk Road founder Ross Ulbricht) became aware of Individual X’s online identity and threatened Individual X for return of the cryptocurrency to Ulbricht. Individual X did not return the cryptocurrency but kept it and did not spend it.”

Assets seized by the US government, if subject to forfeiture, are liquidated and the proceeds used to compensate victims and support various law enforcement efforts, according to the US Marshals Service.

“Criminal proceeds should not remain in the hands of the thieves,” said Kelly Jackson of the IRS’ criminal investigation division.

Blockchain analysis group Chainalysis said Silk Road accounted for nearly 20 percent of total Bitcoin activity at its peak in 2013, when Ulbricht was arrested, peaking at just under $40m in monthly volume in September 2013.

The US government sold Bitcoin seized from a different Silk Road wallet at auction in 2015.

Silk Road founder Ulbricht is currently serving two life sentences in prison after his 2015 conviction for money laundering, computer hacking and conspiracy to traffic narcotics.