US government now owns Silk Road website and $28m of its Bitcoins

US government now owns Silk Road website and $28m of its Bitcoins

Summary: Through a default decision on Silk Road's seized Bitcoin, the US government has taken ownership of $28m worth of the volatile currency.

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The US government now owns $28m in Bitcoin from the infamous Silk Road ecommerce site, which have remained unclaimed after their seizure last year.

US federal prosecutors have announced the forfeiture of 29,655 Bitcoins (currently worth $28m) that were held on Silk Road's server when the FBI seized it in late September.

The funds and the website were subject to a civil forfeiture action filed by prosecutors on September 30, and are alleged to have been used to facilitate money laundering.

Silk Road's alleged mastermind, Ross William Ulbricht, aka 'Dread Pirate Roberts', was arrested on October and is facing separate criminal charges, including one count of narcotics conspiracy, one count of conspiracy to commit computer hacking, and one count of money laundering conspiracy.

As noted in court documents, the funds have been handed to the US government by default since no one had filed a claim for either the Silk Road website or the "Silk Road Server Bitcoins" within 30 days of the claim being filed. 

Ulbricht however has filed a claim over a much larger cache of 144,336 Bitcoins — today worth around $130m — that was also seized at the time of his arrest. Those Bitcoins however were found on hardware belonging to Ulbricht, who has previously denied being Dread Pirate Roberts.

Manhattan US attorney Preet Bharara said the Bitcoins were forfeited because they were they were the proceeds of crime, not because they were online currency.

"With today's forfeiture of $28m-worth of Bitcoins from the Silk Road website, a global cyber-business designed to broker criminal transactions, we continue our efforts to take the profit out of crime and signal to those who would turn to the dark web for illicit activity that they have chosen the wrong path," Bharara said in a statement.

"These Bitcoins were forfeited not because they are Bitcoins, but because they were, as the court found, the proceeds of crimes."

The forfeited funds and website will now be at the disposal of the US Marshals Service.

More on Silk Road

Topics: Government US, E-Commerce

Liam Tung

About Liam Tung

Liam Tung is an Australian business technology journalist living a few too many Swedish miles north of Stockholm for his liking. He gained a bachelors degree in economics and arts (cultural studies) at Sydney's Macquarie University, but hacked (without Norse or malicious code for that matter) his way into a career as an enterprise tech, security and telecommunications journalist with ZDNet Australia. These days Liam is a full time freelance technology journalist who writes for several publications.

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Talkback

20 comments
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  • Because they stole it

    nothing was proven. They simply said it was illegally gained and took it. No proof. I don't care how "obvious" they think the claims are, no proof.
    timspublic1@...
    • Agreed! people should be arrested selling coke and illegal guns

      on the street, but should be 100% immune from any wrongdoing or crime if they sell the same thing off a web site!
      William.Farrel
    • But the owners didn't show up in court either

      They didn't even send a lawyer.
      John L. Ries
  • Because they stole it

    nothing was proven. They simply said it was illegally gained and took it. No proof. I don't care how "obvious" they think the claims are, no proof.
    timspublic1@...
    • proof

      No proof was offered that they were legal. Which is why it was a default judgement. If people who owned those coins showed up to court they could have presented evidence that the coins were legal.
      Knowles2
      • Innocent Until Means . . .

        Under American law, you are innocent until proved guilty. that means you don't have to prove your possession of something is legal. Quite the opposite; government has to prove it's not.

        Theft by government decree is still theft.
        shovelDriver
        • That's a good point

          I have stated before that I believe that a civil complaint (by a government agency or anyone else) should be required to be accompanied by enough documentary evidence to substantiate the claims made (the defendant would, of course, still have the privilege of refuting it in court). This is one reason why; another is that private litigants have been known to file dubious lawsuits for strategic or malicious purposes (to include what amounts to legalized extortion).
          John L. Ries
          • It was pointed out years ago

            Civil forfeiture laws were updated in the Reagan-era War on Drug to reverse the the Constitutional concept of "Innocent until proven guilty." Forfeitures are assumed valid unless the owner "proves" that the money or property was legal. And the courts have consistently upheld this legal fiction.

            Cops and prosecutors in the US have used this law to seize over $170 Billion in funds and property WITHOUT having to prove anything. In fact a large number of seizures are never linked to a criminal conviction of any sort. Where do the funds go? To the police and law enforcement agencies, as a kind of "bounty" so that there is a big incentive for the cops to keep stealing from ordinary citizens.
            terry flores
          • I made my proposal...

            ...what's yours?

            A requirement that the evidence be disclosed at the time the lawsuit is filed is definitely not "guilty until proven innocent".
            John L. Ries
          • Not so simple...

            The 'aggrieved' party has an adequate mechanism for legal recourse to challenge the seizure. They remain innocent. Ostensibly the Authorities have done due diligence to search and seize on reasonable grounds. Because they can be successfully challenged.
            But why $170B successfully seized you say? The parties 'aggrieved' forfeit as they cannot establish legal ownership. Guilty by default.
            You make these not so fine folk sound so innocent, preyed upon by Big Bad Gov't.
            PreachJohn
          • In Canada

            We have no such phenomenon as the Freaks who make a business/living papering the countryside with Lawsuits. Playing heavily on the fact that many will settle rather than pay to fight even a baseless Lawsuit out in Court.
            If a Lawsuit is judged frivolous or malicious in Canada, there is substantial penalty remedy available against it.
            Also you should check out our new CRTC Phone Unlocking Laws, in force since Dec. 2/2013. You Folk can only dream under your present regime.
            PreachJohn
          • http://www.iphoneincanada.ca/carriers/crtc-wireless-code-live-20-rights/

            12. to cancel your contract at no cost after a maximum of two years
            13. to cancel your contract and return your phone at no cost, within 15 days and specific usage limits, if you are unhappy with your service
            14. to have your phone unlocked after 90 days, or immediately if you paid in full for your phone
            15. to have your service suspended at no cost if your phone is lost or stolen
            16. to receive a notification when you are roaming in a different country, telling you what the rates are for voice services, text messages, and data usage
            17. to a minimum seven-day grace period in order to “top up” your prepaid card account and retain your balance
            PreachJohn
          • 1-9 for PostPaid

            12-17 is for Prepaid; 1-9 is for PostPaid
            1. to cancel your contract at no cost after a maximum of two years
            2. to cancel your contract and return your phone at no cost, within 15 days and specific usage limits, if you are unhappy with your service
            3. to have your phone unlocked after 90 days, or immediately if you paid in full for your phone
            4. to have your service suspended at no cost if your phone is lost or stolen
            5. to receive a Critical Information Summary, which explains your contract in under two pages
            6. to receive a notification when you are roaming in a different country, telling you what the rates are for voice services, text messages, and data usage
            7. to limit your data overage charges to $50 a month and your data roaming charges to $100 a month
            8. to pay no extra charges for a service described as “unlimited”
            9. to refuse a change to the key terms and conditions of your contract, including the services in your contract, the price for those services, and the duration of your contract
            PreachJohn
          • Frivolous or malicious lawsuits

            We have such laws here in the States but, in my humble opinion, they're too easy to get around. Certainly, filing a frivolous or malicious lawsuit should cause offending lawyers to be fined and repeat offenders to be disbarred (and maybe if the jury decides the losing side's case was without merit, it should be allowed to award costs to the winner).

            However, I continue to oppose unconditional loser pays in civil cases as such a rule will inevitably favor the litigant with the deepest pockets and those without the resources to sue will tend to get stepped on.
            John L. Ries
  • Looks like the US Government is in the Bitcoin business...

    ...like it or not.
    John L. Ries
    • Not Only That

      Governments everywhere seem to get their sticky fingers/tentacles in everything. Whether we like it or not. Whether they intend to or not.
      PreachJohn
  • Can those coins be invalidated somehow?

    Flagged and removed? They are just data, right?
    Han Rasmussen
    • Why should they be?

      It's not like Federal Reserve Notes are burned when they're similarly seized.
      John L. Ries
  • Who else?

    Who else but the Gov would know more about 'illicit' activity. They practice it on a daily basis. They also are known offenders in drug trafficking. So, this should be a real boon to them.
    at0m1k
  • The government's mafioso approach

    to the things they don't like is a shady area of non-disclosure. Never having seen the site or its contents makes me wonder how far they went to gain control of the Bitcoin. That is obviously their primary target as it is not taxable income and we know how much this government likes to piss away money on their useless projects.
    The love of money is at the root of evil.
    nesdave