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The US government seized $1 billion in bitcoin from dark web marketplace Silk Road
Earlier this week, the bitcoin community was shocked when a digital wallet containing roughly $1 billion in bitcoin -- thought to be proceeds from the now-shuttered dark web drug marketplace Silk Road -- was emptied by an unknown individual. Now, those responsible for cleaning out the funds have revealed themselves: it was the US government.
The Department of Justice announced on Thursday that it had seized the wallet's contents as part of a civil forfeiture case targeting the Silk Road. The government said it retrieved the roughly 70,000 bitcoins with the help of an unnamed hacker, whose identity is known to the government but who is simply referred to as "Individual X" in court documents.
"Individual X" allegedly hacked the Silk Road's payments system some time in 2012 or 2013. The government says that the Silk Road's creator Ross Ulbricht, who is currently serving a double life sentence plus 40 years for his role in the site, "threatened Individual X for the return of the cryptocurrency," but the unknown hacker refused. On November 3rd, Individual X agreed to forfeit the bitcoin to the US government and helped transfer the money. It's unclear if Individual X has been arrested or how their cooperation was attained.
In a press statement, US Attorney David L. Anderson celebrated the operation as a big success for the government. "Silk Road was the most notorious online criminal marketplace of its day," said Anderson. "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."
Silk Road was "the most sophisticated and extensive criminal marketplace" on the internet, said the Department of Justice, operating between 2011 and 2013 before it was taken offline by the FBI. The US government estimates that the website generated around 600,000 bitcoins in commissions during this period. Around 175,000 of these were seized when Ulbricht was arrested and the website shut down in October 2013.
The Department of Justice did not say what it plans to do with the $1 billion in newly-seized bitcoins, but in the past it has auctioned off similar hauls of cryptocurrency. Such sales are processed like any other civil forfeiture, reports The Wall Street Journal, with profits kept by the agency and added to its budget.
Posted on def3