US: We've just seized $1bn in bitcoin stolen from Silk Road by 'Individual X' hacker

US Justice Department makes its largest-ever seizure of cryptocurrency, which once belonged to Silk Road.

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The US Justice Department says it's seized $1bn in bitcoin allegedly stolen by a hacker from Silk Road creator Ross Ulbricht before his arrest for running the dark-web market. 

Announcing the bitcoin seizure from the unnamed hacker, the Department of Justice revealed it is now seeking forfeiture of the illicit funds, which represent its largest haul of cryptocurrency to date.

Ulbricht operated Silk Road between 2011 and October 2013, when the FBI seized the dark-web site and arrested him. He was convicted in 2015 for money laundering and distributing narcotics, and sentenced to life in prison. He lost an appeal for a new trial in 2017

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Over that period, the site generated revenues of 9.5 million bitcoins and earned commissions totaling over 600,000 bitcoins.

According to the complaint, earlier this year law enforcement used a bitcoin attribution company to analyze bitcoin transactions carried out by Silk Road and noticed 54 transactions around 2013 that were sent to two addresses totaling 70,411.46 bitcoins. 

Since the transactions weren't recorded in Silk Road's database, it was assumed the funds were stolen. 

In April 2013, the bulk of the funds totaling 69,471.082201 bitcoins were sent to an account referred to as '1HQ3', the first characters in the address. 

"Between April 2015 and November 2020, the remainder of the funds, 69,370.082201 bitcoins, remained in 1HQ3. As of November 3, 2020, 1HQ3 had a balance of 69,370.22491543 bitcoin (valued at approximately $1bn as of November 4, 2020)," the document states.

Investigators determined that the unnamed hacker, referred to as 'Individual X' in court documents, was involved in a transaction that related to the account. 

The US Internal Revenue Service and the Justice Department reckon Individual X stole the cryptocurrency from Silk Road.

"According to the investigation, 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," the complaint reads.

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Earlier this week, the unnamed hacker agreed to forfeit the cryptocurrency to the US Attorney's Office, Northern District of California and on November 3, the US government took possession of the cryptocurrency. 

Now the Justice Department needs to prove that the seized cryptocurrency is subject to forfeiture. 

In 2014 the US government auctioned off about 30,000 of the bitcoins found in the wallet files on Silk Road's servers.