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FBI Seized 144,000 Bitcoins ($28.5 Million) From Silk Road Bust
SonicSpike writes "An FBI official notes that the bureau has located and seized a collection of 144,000 bitcoins, the largest seizure of that cryptocurrency ever, worth close to $28.5 million at current exchange rates. It believes that the stash belonged to Ross Ulbricht, the 29-year-old who allegedly created and managed the Silk Road, the popular anonymous drug-selling site that was taken offline by the Department of Justice after Ulbricht was arrested earlier this month and charged with engaging in a drug trafficking and money laundering conspiracy as well as computer hacking and attempted murder-for-hire. The FBI official wouldn't say how the agency had determined that the Bitcoin 'wallet' — a collection of Bitcoins at a single address in the Bitcoin network — belonged to Ulbricht, but it was sure they were his. 'This is his wallet,' said the FBI official. 'We seized this from DPR,' the official added, referring to the pseudonym 'the Dread Pirate Roberts,' which prosecutors say Ulbricht allegedly used while running the Silk Road."
They may have "seized" them, but unlike with physical property, how can they be sure they are "unspent" and still worth-ful?
What if, when they try to convert them to cash, they are told they've already appeared in the blockchain and have been "spent" elsewhere? Would that not be quite embarrassing? That, from under the noses of the FBI, someone has recovered all that money via an anonymous currency exchange and ran off with the proceeds?
I sincerely hope that they cash in the Bitcoins before something appears on the blockchain from that wallet. Double-spending is blocked, but that doesn't mean the FBI would be the first person to try to spend them. Especially not now they've put it on the news. Anyone could have a copy of that wallet.
If the feds have seized the file he had with them in it, would someone be able to sped a copy of that file? Does bitcoin have a way to let you "back up" your money so that in the case of a government raid you secret copy elsewhere can be put into action and use the bitcoins for your defense fund, etc? Because it is well known the feds will seize all assets right away to prevent the accused from being able to afford good council and fight in court. If you don't have access to your money, you cant hire good lawyers.
Because if this is the case, then I look at bitcoin with more interest and a different light, was that by design or by accident?
Do not look at laser with remaining good eye.
i think if the wallet is encrypted they couldnt determine how many coins were in there, or the address without decrypting it. but i think whats extra funny, is that if they have the coins, the fbi/etc seems to think that cryptocurrencies are basically used for crime, so by converting them into USD at an exchange, they are being sold to criminals (like, not the exchange, but eventually) to fund more money laundering and organized crime. pure hilarious because to get any use from them, thats what they have to do. give millions of dollars to organized crime
Sure they can.
FBI will have a new addition to their "uniform" - alpaca socks.
And they can also buy absurd amounts of quality coffee. This is actually it, there is nothing else you can use your bitcoins for.
http://yro.slashdot.org/story/13/10/26/1153212/fbi-seized-144000-bitcoins-285-million-from-silk-road-bust#
I wonder if this "Dread Pirate Roberts" is only one person, given how the name was used in The Princess Bride.
Will the government then be auctioning off the proceeds? Holding them for cashing in later like a bond? Who is advising them on managing the funds? There is both a certain irony and legitimacy in a state holding this new stateless currency.
The coins aren't in the wallet - they're in a completely transparent, publicly viewable account in the bitcoin block chain. Every transaction is visible to everyone. The wallet only contains the credentials that allow you to transfer the coins to another account. If the wallet was encrypted, and they were unable to access the credentials, then they cannot meaningfully seize the account since another copy of the credentials could (and should) exist elsewhere allowing someone else to spend the coins.
--- Most topics have many sides worth arguing, allow me to take one opposite you.
the standard is not "proof", the standard is, they need to follow "due process", which I'm sure they are doing, though he is free to challenge it.
it's like the old "if people are innocent till proven guilty, how can they hold you in jail till your trial?" answer: you are not innocent till proven guilty, you are entitled to the presumption of innocence in court, but outside the court, much more reasonable standards prevail, like "was a crime committed?" and "is there evidence that points to somebody?" That's how due process works.
Sounds like feds are going to have uphill battle in court trying to prove all these beyond reasonable dought. After all in court its not what they say, but what they can actually prove. Lets just hope some innocent people docent come forward and claim those bitcoing to be stolen by feds from them... Would be embarrashing, not to mention blow feds case out of water...
FBI will have a new addition to their "uniform" - alpaca socks.
And they can also buy absurd amounts of quality coffee. This is actually it, there is nothing else you can use your bitcoins for.
Lies.
http://usebitcoins.info/
There are thousands of businesses that accept Bitcoins.
Well, if they were able to seize the account (presumably meaning transfer the coins to a FBI-controlled account) then they at least know that it belonged to Person X, because they had to get the credentials from *someone*. So on that front what are you going to claim? "Honest officer, I was just holding this authorization to spend millions of dollars worth of bitcoins for a friend" ?
Beyond that I can't say much as I haven't looked into the details of the case.
--- Most topics have many sides worth arguing, allow me to take one opposite you.
Given the track record of American law enforcement regarding seizures of assets "believed" to have been gained in unlawful transactions, I would say "Good Luck" fighting that. Further damaging his case, there is a link at the Forbes piece describing some (alleged) Mr. White-like tactics against an embezzler and a blackmailer.
Happiness in intelligent people is the rarest thing I know.
Ernest Hemingway
They could buy shitloads of reddit gold.
If that kind of "evidence" holds a drop in water in court, good night legal system.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
Should've opened a bank. There, you can take any kind of risk and we pay the price if it blows.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
The legal standards for asset forfeiture are not what you think they are.
http://en.wikipedia.org/wiki/Asset_forfeiture
They can give them to organizations that accept bitcoins as donations. I don't think that they will pick Wikileaks, the Pirate Party, or even free software with focus in privacy, but i.e. Khan Academy or Sugar Labs are good neutral enough candidates that even they can agree that could give a good use to that donation..
The coins aren't in the wallet - they're in a completely transparent, publicly viewable account in the bitcoin block chain. Every transaction is visible to everyone. The wallet only contains the credentials that allow you to transfer the coins to another account. If the wallet was encrypted, and they were unable to access the credentials, then they cannot meaningfully seize the account since another copy of the credentials could (and should) exist elsewhere allowing someone else to spend the coins.
Given that according to TFA, the Feds have already transferred the coins to another account that they hold and that the transfers are a part of the current accepted blockchain, I would say that they have seized them. A side effect is that by revealing the blockchain entry for the transfers, they have marked these coins as government owned and traceable for the rest of their existence.
I wonder if it would be possible to also transfer the coins using a blockchain prior to the Fed transfer, then somehow replace the Fed transfer in the current blockchain and get the majority to accept the substitution, effectively denying the Feds their seizure? I realize that the majority design of Bitcoin is meant to prevent this sort of thing in reality, but it should be theoretically possible, right?
'The tyrant will always find pretext for his tyranny.' - Aesop's Fables
This would be fraudulent for the body that is supposedly responsible for the money. They would be tainting the US Dollar in a real way that wouldn't go unnoticed.
They can give them to organizations that accept bitcoins as donations. I don't think that they will pick Wikileaks, the Pirate Party, or even free software with focus in privacy, but i.e. Khan Academy or Sugar Labs are good neutral enough candidates that even they can agree that could give a good use to that donation..
Unless Congress does it, that's called a "gift of public funds" and is, for obvious reasons, illegal.
No, not even a little. Have you studied the technology? It's all pseudonymous, which is a completely different thing. Anybody who wishes to can completely monitor all activity on any account, the only anonymity resides in how well you hide the connection between yourself and your account number. Publish your account number publicly, like any legitimate business would do to accept payments, and there is no anonymity whatsoever, and every transaction past and present with that account is now known to be a transaction with that business. If you want to be anonymous then the onus is completely on you to make sure a link between your account number and your real identity is never discovered, the technology offers nothing in that regard.
Frankly, take away the gauze of anonymity and what you have is every financial analyst's wet dream of a currency - *every* transaction laid bare for all the world to see, in real time, and with a permanent record.
--- Most topics have many sides worth arguing, allow me to take one opposite you.
Yeah, if you control fifty-one percent of the bitcoin network then you can retroactively rewrite financial history. It'll be pretty obvious though, so don't expect the other 49% to simply accept it.
--- Most topics have many sides worth arguing, allow me to take one opposite you.
Well, he took the risk, and paid the price.
The Dude Pirate Roberts abides.
No, you can't 'rewrite history'. What the 51% attack lets you do is block any additional transactions by refusing to produce blocks with those transactions in them, which lets you do double-spends. However, you cannot spend someone else's coins because you cannot create valid signatures without their private keys.
Are there any that sell useful physical goods (not arts and crafts) at reasonable prices? I've never found one that isn't ridiculously expensive over shopping at a non-BTC store.
The problem is that the government don't recognize bitcoins as money, so giving it is not using them as public funds.
Nothing in your post is correct.
They probably just put him in an interrogation room and talked about Federal prison until he cried and gave up his passwords.
Yes, if you 51% the network. But you'd undo every payment that occurred since then, and you'd undo every miners block reward as well. Therefore, no one will possibly go along with that idea.
Because FBI thinks they seized 144000 BTC, not $28mln or $14mln. USD numbers are claimed as a fact by PR people and news outlets to make good headlines.
PS: It's spelt "incompetent", you moran.
http://bitcoin.org/en/you-need-to-know
Bitcoin is not anonymous
Some effort is required to protect your privacy with Bitcoin. All Bitcoin transactions are stored publicly and permanently on the network, which means anyone can see the balance and transactions of any Bitcoin address. However, the identity of the user behind an address remains unknown until information is revealed during a purchase or in other circumstances. This is one reason why Bitcoin addresses should only be used once. Always remember that it is your responsability to adopt good practices in order to protect your privacy.
Here is one of the transactions.
You can see that the fee paid was 0.
You can see their account here.
Why speculate when the evidence is all public and easy to find?
Obligitory XKCD 538 link.
Just like last time, the market moves over the last few days strongly suggest that the FBI is already selling, or has already sold these bitcoins into the market.
Great. How long will you last under interrogation?
Publish your account number publicly, like any legitimate business would do to accept payments...
The recommendation is to use a different account for each order, not just for anonymity but so that you can distinguish the payments apart from the amount, which may not be unique, or even an exact match for the order in the event of a mistake. It's fairly rare even for "legitimate" businesses to have just one account number.
Even apart from unique receiving addresses, any business dealing in large quantities of bitcoins will probably want separate "working funds" and offline "cold storage" accounts, and general practice is to generate a new address every time you send funds to receive the "change". Some consider this more secure against cryptoanalysis since the full public key isn't revealed until the funds are spent, meaning that if you do use a new address every time then the only addresses with known public keys contain no funds.
"The state is that great fiction by which everyone tries to live at the expense of everyone else." - Bastiat
As the link in the summary shows: https://blockchain.info/address/1FfmbHfnpaZjKFvyi1okTjJJusN455paPH
The bitcoins are still in the FBI seizure account. Not only that, entrepreneurs are sending small amounts to the account, with advertising attached, for online casinos, or cursing out the FBI. I find that amusing. If you scroll down past the tiny (0.0001 BTC) transactions, you will see the big transfers in for 324 BTC at a time. On a phone that spells out "FBI", so that is pretty clear who is doing the transfers.
You can't spend someone else's coins without their private key, but you can rewrite history by coming up with a longer blockchain which does not include certain previously-accepted transactions. That would allow DPR, or someone else with his private key, to transfer the funds "before" the FBI moves them to a different account.
At this point it would be really expensive to pull off, since the FBI's transfers are buried 346 blocks behind the head of the blockchain, but you could do it if you controlled 51% or more of the mining network for a long enough time. Assuming you had exactly 51% of the network, and started right now, it should take right at 120 days to overcome the current blockchain's lead. That gets significantly better as you control more of the network; in the best case, if 100% of the network went along with the scheme, it would only take two days.
"The state is that great fiction by which everyone tries to live at the expense of everyone else." - Bastiat
http://www.wtcr.ca/
You can get an ASICMINER Block Erupter USB for only 0.05 BTC.
Get free satoshi (Bitcoin) and Dogecoins
Ignoring the logistics of actually doing that (which would affect many more transactions than just that), you'd have to convince 51% of miners that the loss of confidence in the Bitcoin system that would result from that network meddling would be worth it. A 51% attack on Bitcoin for any reason would destroy a lot of confidence in the system. The price of bitcoins would plummet. Good luck convincing miners, who profit from the price of bitcoins, to ever do that. Also, not everyone who uses or mines Bitcoin is a big fan of the Silk Road.
You are not talking about the 51% attack as generally understood. You can't, because then you are talking about requiring far more than 51% of power for a few blocks: you need 51% of the network indefinitely to build a longer blockchain *and* you also need to defeat the checkpoints used by most clients & miners *and* defeat whatever community-based mechanisms happen.
You wouldn't need 51% "indefinitely", just long enough to catch up and make your chain the longest blockchain. After that the rest of the network has a choice: follow the protocol and use your blockchain, or perform a deliberate 51% attack of their own.
Checkpoints and other "community-based mechanisms" are outside of the Bitcoin protocol. In any case checkpoints are inserted into the official client on fairly rare occasions to cover blocks which are already well-established. There won't be any checkpoint protecting the FBI's transaction for some time.
"The state is that great fiction by which everyone tries to live at the expense of everyone else." - Bastiat
If you can beat the general network for 120 days (and increasing, and also the difficulty is generally increasing as well, making 120 days even more of a lower bound), then I don't see how that is meaningfully different from being able to do so indefinitely. A third of a year is a pretty long time.
Beating the network indefinitely would cost about 60 times as much, assuming you can get a reliable 5% APY. (If a 120-day attack costs $X, then the yield from a 60*$X investment at 5% is sufficient to maintain the attack indefinitely.) A factor of 60 is a fairly large difference.
That's assuming you only have 51%. The time required increases asymptotically as you approach 50%. At 60% the attack would take only 12 days, reducing your overall cost by an order of magnitude.
"The state is that great fiction by which everyone tries to live at the expense of everyone else." - Bastiat
Unless the FBI cares to prove it, nobody knows who controls the receiving address. It could easily be someone who paid for the coins.
For example, an exchange who then sold an offsetting amount from other controlled addresses.
Doesn't your investment claim make some false assumptions like difficulty remaining constant?
That sounds like a lot of considerations and headache that are only relevant to people seeking to hide their account transactions. If someone were to go down and buy a TV at BitMart I'm pretty sure the sequence would be
cashier: "you owe X bitcoins, please transfer to Account A"
you: "okay, here it is coming from Account B"
cashier (a half hour later after the transaction is confirmed): "thank you, come again."
How on earth would involving several additional accounts in the transaction simplify anything? All you're doing is increasing the number of transaction fees that need to be paid (as that is the expected funding model as "mining" ceases to be profitable on it's own)
--- Most topics have many sides worth arguing, allow me to take one opposite you.
If you don't give each order a unique receiving address, you have no idea which incoming funds are meant to pay for which orders. You give the buyer an address to send funds to; they aren't expected to know which address(es) the funds come from. They just enter the receiving address and amount (or scan a QR code) and tap "send". Some of the smaller clients stick to a single address and private key, but most of them, including the official client, use randomly-generated "change" addresses which aren't shown by default in the UI. Any number of transactions to different addresses ("change" or otherwise) may be combined to fund a single transfer. This doesn't even consider web-wallets (like Coinbase) where the funds come from a shared address controlled by the service provider.
In practice, every merchant accepting bitcoins today already uses unique receiving addresses. It's not nearly as much of a headache as you seem to think. For the buyer it's completely transparent, and for merchants the process is built into standard shopping-cart interfaces. It's all completely automated. (The real headache is processing refunds.)
P.S. No one would hold a customer at a brick-and-mortar store waiting for confirmations; there's less risk of fraud once they've seen the transaction relayed to the network, even with zero confirmations, than there would be from normal credit card chargebacks up to several months later. If they're really concerned, they'll just require ID so that they can track you down later. It's not like you could get very far in 30 minutes anyway.
"The state is that great fiction by which everyone tries to live at the expense of everyone else." - Bastiat
Where does all the money go that the government takes from seizures? I've always wondered.
I did assume a constant difficulty, or rather a constant cost to maintain the attack. In the end the difficulty is going to be determined mainly by the cost of energy, once all the efficiency gains (GPU vs. FPGA vs. ASIC, etc.) have been worked out. It won't keep increasing indefinitely. As difficulty increases, the profitability of mining decreases, which acts as negative feedback. On the other hand, if difficulty does increase, say by 1% per year, that just means you'd need even more seed money to offset the increasing cost. You'd need to pay for the attack with 4% and put the remaining 1% back into growing the investment, meaning you'd need 75 times as much money rather than 60 times. Which, ultimately, only reinforces my argument that a permanent 51% attack would be much more costly than a limited 120-day attack.
"The state is that great fiction by which everyone tries to live at the expense of everyone else." - Bastiat
Well, if they overstate the value of the bitcoin like they overstate the value of siezed drugs, they got about $3.24 in bitcoin...
Other probabilities include, but are not limited to; Drug trafficking; smoking a joint with the UPS guy. Money Laundering; Buying office supplies via bitcoin. Computer hacking; installing TOR. Murder for hire: Called Orkin for exterminator.
C'mon , who can believe a fucking word ANYONE involved in Federal Government says? How about when it's reported by Newsclowns?
Uhm , yeah, you get my drift.
*Repent!Quit Your Job!Slack Off!The World Ends Tomorrow and You May Die!
Well, you could send them back, but I don't think there's currently any technical mechanism to be able to refuse to accept them, Giving your account bitcoins is a transaction between the sender and the network, you aren't actually involved at all except to provide the target account #.
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--- Most topics have many sides worth arguing, allow me to take one opposite you.
Is it possible to refuse to accept any bitcoins that were seized? If so then management becomes like the spam blocking lists.
They ARE out to get you simply because They are in it for themselves and they don't care about you.