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US Government To Convert Silk Road Bitcoins To USD
angry tapir writes "The founder of the Silk Road underground website has forfeited the site and thousands of bitcoins, worth around $28 million at current rates, to the U.S. government. The approximately 29,655 bitcoins were seized from the Silk Road website when the Federal Bureau of Investigation (FBI) moved to close it in late September. 'The United States Marshals Service shall dispose of the Silk Road Hidden Website and the Silk Road Server Bitcoins according to law,' wrote Judge J. Paul Oetken, of the U.S. District Court for the Southern District of New York, in a court order that was issued this week. The ruling represents the largest-ever forfeiture of bitcoins. 'It is the intention of the government to ultimately convert the bitcoins to U.S. currency,' said Jim Margolin, a spokesman for the U.S. Attorney's office for the Southern District of New York."
No, but his money and property has.
Civil Forfeiture law is insane.
Not likely.
The US prosecution already decided that The Silk Road is an illegal venture, and on those grounds they have seized the property linked to it. This is exactly the same grounds on which they can seize say a boat load full cocaine, plus the stack of cash that's on the same vessel.
A totally different issue is to find and prosecute the individuals responsible for running the venture (e.g. those operating the boat or responsible for the cocaine on board). These people may in turn also have property linked to the illegal venture, which then may be seized as well (I don't know what US law says about that).
Now if the person is found not guilty, he can prove the seized bitcoin (and possibly other property) are his, and that the operation was in fact not illegal or that the seized property was not linked to that operation, then he may be able to get back his property.
According to bitcoincharts.com, trading volume in the past 24h was over 540k bitcoins. Not sure what part of that is from exchanges, but I doubt 30k extra bitcoins are going to really be earth shattering. I could be wrong though, Bitcoin prices are volatile and this kind of news can affect things and cascade.
Right now, I can't buy groceries with BTC.
Wrong. Whole Foods accepts bitcoin.
I can't take a friend out for lunch and pay with BTC.
Wrong again
I can exchange BTC for my local currency and then go about my business, but that's about it.
Overstock.com, Amazon, CVS, Target, Victoria's Secret, Zappos, the list keeps growing.
Of course most of these stores actually use a payment processor that immediately converts the bitcoins to USD for them, but if more and more stores start accepting it, at some point the currency may become so practical that such conversions will no longer need to be made. If a company does business with another company that accepts bitcoin, they may as well take bitcoin from their clients and then use those bitcoins to pay their suppliers. Transaction fees are much lower than those for credit cards, you don't even need any middle men.
What the article doesn't say is why these assets have been seized, ahem, "forfeited," already, and what legal process was involved. I'll understand if you don't give the Federal government the benefit of the doubt, and assume the legal process was the prosecutor saying "those are mine, thanks." ;-)
TFA does say:
(emphasis added). So it looks like there is a legal process going on to seize more assets, in parallel with the criminal trial, and Ulbricht has some right to be heard in court before the rest of his Bitcoins get seized.
I do agree, though, that this looks like an erosion of the presumption of innocence, which combines poorly with rapidly-growing Federal authority.
[Sir Garlon] is the marvellest knight that is now living, for he destroyeth many good knights, for he goeth invisible.
Totally. wrong. The magic words that exist on USD and don't exist on BTC are "legal tender". It means the bad boys with guns of the US government protect the purpose of your USD's on US soil, as a means of exchanging goods and services. In other words, currencies become accepted because regional powers are willing to kill, maim, and imprison if need be to make it so.