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Feds Confiscate Record $29 Million BitCoin Booty From Dread Pirate's Hard Drive
When three weeks ago, the FBI arrested Ross William Ulbricht - the creator of the now shutdown Bitcoin-only "alternative" marketplace Silk Road also known as Dread Pirate Roberts, some were surprised that the Feds only confiscated about $3.6 million worth in Bitcoins from Ulbrecht. Proving all doubters wrong, and that creating the first "libertarian" marketplace not subject to any rules and regulations, not to mention fiat monetary constraints, actually does pay quite well, moments ago it was revealed that Federal prosecutors had found an additional $29 million, or 144,336 BitCoins, belonging to the Dread Pirate. According to Reuters, the booty was discovered on "computer hardware" belonging to Ulbricht. The repossessed electronic money, whose encryption technologies seem to leave a bit to be desired, has now been impounded and will likely remain on the FBI's hard disks indefinitely.
More:
Authorities said the haul represented the largest ever Bitcoin seizure.
Ulbricht's lawyer could not be contacted on Friday evening (local time), but had previously told reporters his client denied the charges.
The currency, which has been in existence since 2008, first came under scrutiny by law enforcement officials in mid-2011 after media reports surfaced linking bitcoins to Silk Road.
The US Attorney's Office said with nearly 30,000 bitcoins previously seized, federal agents have now collected more than $US33 million in bitcoins based on current value.
Ulbricht is due to appear in court within weeks to face criminal charges of narcotics trafficking conspiracy, computer hacking conspiracy and money laundering conspiracy.
It remains to be seen if the Dread Pirate will be able to transact in prison using BitCoins. It also remains to be seen if leading hedge fund/PE firms such as Fortress, which recently voiced its support for BitCoin, will step in to fill the void left by Ulbricht's arrest realizing the great monetary potential - in either USD or BTC terms - to be reaped by providing the masses with what is a truly anonymous marketplace.
Finally, for those who missed it the first time, here is some additional information on the identity and motivation of the Ulbricht:
Who is the Dread Pirate Roberts?
The court documents described Mr Ulbricht, 29, as a former physics student at the University of Texas, who had gone on to study at the University of Pennsylvania between 2006 and 2010.
It was here, according to Mr Ulbricht's LinkedIn profile, as quoted by court documents, that his "'goals' subsequently 'shifted'".
He wrote on the social network that he had wanted to "give people a first-hand experience of what it would be like to live in a world without the systemic use of force" by "institutions and governments".
Authorities said he took to online forums to publicise Silk Road as a potential marketplace for drugs back in January 2011.
In one such message, a user believed to be Mr Ulbricht allegedly said: "Has anyone seen Silk Road yet? It's kind of like an anonymous Amazon.com."
Investigators said he used the same channels months later to recruit help - starting with a search for an "IT pro in the Bitcoin community".
The FBI said Mr Ulbricht would appear in San Francisco federal court later on Wednesday.
And more from NYMag:
The dark Internet's favorite massive drug marketplace, Silk Road, was shut down by the FBI last night and its alleged mastermind arrested on an array of colorful charges after a nearly two-year undercover operation.
Twenty-nine-year-old Ross Ulbricht, a.k.a. "Dread Pirate Roberts," was picked up in San Francisco and accused of running the underground e-warehouse while allegedly laundering money, trafficking narcotics, and even hiring a hit man to kill one of the site's users. Fittingly for a computer nerd, not a Heisenberg, he left a rich personal trail online.
According to the federal complaint, filed in the Southern District of New York, "Silk Road has emerged as the most sophisticated and extensive criminal marketplace on the Internet today," enabling "several thousand drug dealers" to move "hundreds of kilograms of illegal drugs." The site's sales totaled about $1.2 billion in the form of 9.5 million Bitcoins (naturally). About $3.6 million in the Internet currency has been seized.
Ulbricht, though, wasn't exactly great at covering his tracks, attaching his name, photo, and personal e-mail address to Silk Road business, eventually resulting in his arrest.
...
Last year on his Google+ account, Ulbricht, who's now charged with facilitating the sale of drugs through the mail, asked, "Anybody know someone that works for UPS, FedEX, or DHL?"
...
On YouTube, Ulbricht ("ohyeaross") liked videos by Ron Paul, along with clips called "The Market for Security" and "How to Get Away With Stealing." (Of Paul, Ulbricht once told his Penn State Univeristy paper, "There's a lot to learn from him and his message of what it means to be a U.S. citizen and what it means to be a free individual.") Most recently, he followed the Vice channel.
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The kid has a lot to learn from the likes of Greenspan and Dimon.
So once the FBI hands it over, is $29 million enough for the plunge protection team to fuck Bitcoin over with?
If you know their love of leverage, then....probably.
In prison, cigarettes are a form of currency. Will there be BitButts in the future?
Eww, that got me thinking of buttcoins in another sense...
Prison currency, LOL.
I once had a story told to me from a paramedic about a frequent flyer who was incarcerated. He would regularly wind up with STDs because he would let the other prisoners use his stoma.
Now, go google "stoma." I dare you!
I guess the CIA will need to make more huh.
Having possetion of the wallet is entirely different than having access to the BTC in the wallet. So author would be flatly wrong with his assessment that the encryption leaves soemthing to be desired.
If I understood a comment here yesterday, all the feds have done is steal an (encrypted) copy of his wallet, with which they can do precisely nothing without the key. If DPR has given anyone else his key, and has backups of wallets in a few places, the bitcoins will be available to access to whomever has that key.
I agree w/ SimulacraX. I came to this article thinking they (Feds) had broken the encryption. Did they gain full access & possession of the BC or do they just hold an effectively blank hard drive? Any of you ZH outliers have any real knowledge of this beyond a google search?
Did they find the wllet's password (or private key)?
With the private key, they can spend the bitcoins
Witout it they cannot.
The word "confiscate" may only mean that they have possession of a wallet.dat file and not the password. If he's stupid enough to have the password stored in clear text on anything, he's sunk. Like someone else here said, unless those coins move out of the DPR wallet, nothing's been confiscated.
The FBI moved the coins to 1FfmbHfnpaZjKFvyi1okTjJJusN455paPH over about 400 transactions. It is fairly obvious they found the wallet.dat file and the password or DPR gave it to them.
DPR Seized Coins 0.0001 BTC
you're seeing so many transactions because lots of people entertained themselves by sending the feds a satoshi with an attached message. they don't have access to the bitcoins stolen from DPR, from what i understand.
Look below the spam, hundreds of transactions dated 2013-10-25. Most of them 324 for coins which I understand is "FBI" dialed on a phone. The address currently contains 144,336 coins (about $26 million at current market rate).
lets be honest, if its encrypted, it can be cracked.
Its just a matter of time.
All the govt has to do is go to the creator and beat the source code out of him.
lets be honest, if its encrypted, it can be cracked. Its just a matter of time.
How many decades can you wait?
LOL - good one.
It's open source. They can look at the code all they want.
Also, about the encryption : the "matter of time" is beyond the lifetime of any federal agent working that case, their kids, future grand-kids, and future great-grand kids.
I am sure those Feds didn't confiscate the shitpaper he had in his house....so if they took bitcoins it tells ya something .
So he really wasn't any different from the fedrez gangsters.
Tell your friends I don't want a lot. Just enough to wet my beak... [/Don Fanucci]
+ 1 for Don Fanucci.
.GOV in a nutshell. But there's a bunch of them.
Banksters want the whole birdbath. .Gov. passes it along and sends you the bill.
Don Fanucci is more honest and efficient.
And you get insurance too.
Whenever the Government wants they can shut down the internet and bye bye bitcoin. They can't do that to material things without a lot of effort.
> Whenever the Government wants they can shut down the internet and bye bye bitcoin.
Correction: the government can shut down the telcos' pipes. If I can get a radio signal out (wifi is radio) to another receiver (wifi is also a radio receiver), the internet still exists and Bitcoin nodes can still run, even in a diminshed state.
The genie's out of the bottle and not even the almighty gubmint can put it back in.
A sad story indeed.
http://en.wikipedia.org/wiki/Demonoid
Demonoid the server was shut down. Bit torrent is still going.
Silk Road was shut down. Bitcoin is still going.
Decentralized, P2P services are the future. The Feds only understand how to shut down centralized services.
The RIAA and MPAA have the Telcos sniffing their traffic with the same Israeli hardware/software that the NSA bought and used. They have systematically been collecting 'evidence' for years just like the NSA - they just haven't figured out a way to monitize that in the courts yet. Ever downloaded a copyrighted song in the last five years? Ever look at an unauthorized movie clip on YouTube before it was deleted?
Bitcoins are great, until the government says that only criminals use bitcoin. Then they go back ten years over all that data in Utah and make lists of all the bitcoin transactions. Then they kick in your door and shoot your dog.
Decentralized P2P services are great, but the NSA, RIAA/MPAA and banksters are already cooking up schemes to counter that. If nothing else, they have a decades worth of internet activity to determine if you can be trusted with a P2P license or IP permit.
"They can't do THAT!"
Yeah, maybe it will magically be different this time...
By the time bank.gov gets around to decalring Bitcoins illegal, no one will be listening to bank.gov anyway.
Money power wanes quickly when it crumbles.
Unsound argument.
http://en.wikipedia.org/wiki/Formal_fallacy
Your FEMA tent number is JH18-119283. Do not lose this information.
That is nonsense!
You can keep your wallet on secure server located someplace safe (eg Swiss) and access it via VPN.
It is simply not feasible for the govt to trace and bust small time Bitcoin users.
Um, you do realize that the Internet exists outside of the US, correct?
I don't know about you guys but I am still holding my breath, waiting for our "brave men and women in uniform" to finally uphold their oaths.
Waiting...waiting...
Oh wait, they are guarding poppy fields in Afghanistan. Fucking cowards.
Wait, well there's always the "Oath Keepers." What will they do next, have another bake sale? Protest? Print up t-shirts?
""brave men and women in uniform" .....Fucking cowards."
You got the thumb down. I might have let it slide if you'd have put some caveats in there like generals/admirals are Fucking cowards.
Nope. Sorry. Anyone following illegal orders is a fucking coward.
"Let's see, they told me to deploy somehwere. Congress didn't declare war, so this is illegal. Well I won't say anything, because I could lose my pension."
Don't even give me any slo-mo flag waving in the background, eagle looking severe, heroic music playing bullshit. No thanks. They're all cowards.
America is being terrorized by domestic enemies of the constitution. And I am supposed to feel maudlin, bleary half-tears for our "brave men and women?" Where are they? When will they do their jobs?
Oh, that's right - that would take character.
I might have let it slide if you'd have put some caveats in there like generals/admirals are Fucking cowards.
The bosses are beyond excuse and the guilt is seeping down toward the enlisted men in a hurry.
I understand that violence may sometimes be necessary, but military worship (and make no mistake, that's what has been going on in America) was a mistake from the beginning.
i's amazing what people will spend their purchasing power for these days.
Should have used DDP/E . The force of the FED is too strong. They have bigger penis than others and hide behind so called laws.
Hey look! Someone doing business!
Arrest! Confiscate! Beat! Jail!
Mr. Holder take care of that stash.
This news is missing a few key points:
1. Bitcoin wallets can easily be copied, so that means even if the Feds seized the wallet file containing all of those coins, another wallet file could still be hidden out there somewhere.
2. Possession of the wallet file doesn't mean anything if the wallet is encrypted. In order to access the coins on an encrypted wallet a password/authentication is necessary.
3. It's entirely possible (in fact, likely) that DPR has a backup copy of that wallet file hidden on some sever or USB key that is stashed somewhere, and that the FBI may not have the password necessary to access the Bitcoins in the copy of the wallet file it currently possesses.
So in other words, unless we see the FBI move coins out of that wallet, it should be assumed that the FBI doesn't actually "possess" the bitcoins in that wallet.
This is another example of how the BitCoin is flawed as a medium of exchange(MOE).
First they think money is something "scarce" rather than simply a "promise to complete a trade". With that false assumption, they create something scarce they call a BitCoin. They create a mining method that purposely wastes resources to simulate the scarcity.
Further, the algorithm has a limit on the number of BitCoins that can ever be produced so that is naturally deflationary.
Finally, as in this example, BitCoins lost are lost forever. They can't be recovered. That too is deflationary. Taken to the limit, in time there will be zero BitCoins but that last one lost will theoretically be worth close to infinity.
Wake up you people with an over allotment of braincells.
Todd Marshall
Plantersville, TX
You are wrong on some many levels, I'm not even sure where I should start.
Money is supposed to be scarce, without scarcity, money is worthless.
Mining does not "waste" resources, it is used to confirm transactions. Without mining, no new coins would come into existence and no transactions could be completed.
Deflation is ideal in a currency with a stable supply. That means the economy is growing faster than the rate of money creation. Only Keynesians think this kind of deflation is a bad thing. For a more thorough explaination, read this.
And finally, Bitcoins are infinitely divisible, so it is impossible for all the coins to ever be destroyed. As long as there is a fraciton of a single bitcoin left in circulation, the entire currency system can keep on chugging along just fine. People will simply transact in ever smaller amounts.
Seems to me that they wouldn't know that they had $29 million worth of bitcoins unless they had access to the wallet.
You can have access to the wallet, but not be able to SPEND them without the password.
Hmmm. Just a thought on Bitcoin.
Ok, I rob a bank and use a Chevy to get away.
Does Chevrolet get charged for aiding and abetting a crime?
They know in advance that criminal activities are possible with their product.
Are they culpable? Why not?
Have you really thought that through?
Almost any product can be used in a crime. I can take the shirt off your back and use it to choke you to death.
Mankind's most dangerous drugs - patriotism, materialism, and organized religion....
Gee Mr. Lenin...
I thought you were dead.
I'll bet you're happy how American schools turned out.
They taught millions of American kids to say that exact same thing.
*tips fedora
What a pretentious douche.
I'm getting REALLY tired of all the dumb-ass MFers who think they know something about technology and laws of physics, but don't: "Oh, but the Gov can do this and that with Quantum this and bullshit that..." [rolls eyes]
ALL that they are really doing with their 2nd and 3rd-hand info and high school degrees (of ZERO technical value), is wanking with their pseudo knowledge, revealing their biases and projecting their fears. If they get into the Octagon of science & tech (rather than be the Audience), they'd better be really, really good. Or be prepared to get publicly creamed.
Right. This is about the 1000th time in history that people said a code was totally unbreakable. They used to say only the Gods could break it. Then witches and warlocks. Then it was aliens only. Now we need anti-matter computers or some shit. Same as it ever was. This unbreakable code will be broken and probably has already been broken by the NSA.
Pure FUD.
Ross,Ross,Ross,you don't need an attorney...just call jon corzine for advice.
Meanwhile every scumbag fuckface foreign money launderer buys up real estate in the United States with impunity!
Perfectly legal as long as they used Govt. approved TBTF banks to launder that money.
All others beware. Justice will be swift and profitable.
from what I understand about bitcoins, all he needs is to memorize his account number and he can access those bitcoins from many servers around the world. they can be mined from his computer, but once mined they enter the bitcoin system and do not exist locally.
The Story of Dread Pirate Roberts
http://www.youtube.com/watch?v=aHZGqBVBCRw (2:24)
What if the jury finds him innocent?
Maybe we'll be told we don't need juries anymore (for your own safety of course)
It would be an amazing step forward if 'confiscating' was replaced by 'stealing'.
Bitcoin ATM goes live in Vancouver this week:
http://www.cbc.ca/m/touch/business/story/1.2251820
Follow the white silk road...
I intend to help this young man, despite his foolish unpreparedness. He was like a water pistol shooting at a canon, and it is a pity that he became as amoral as the old men he challenged.
However, I dislike hypocrisy and blatant theft even more. That's you, HSBC and your protectors who now intend to crucify this young man, while you behave like global warlords, ruining everyone in your path. China next.
This young man will regain all his material loss, and will not be allowed to disappear into the gulag as an enemy of the state, another statistic, another lonely rebel. Like Israeli Mordechai Vannunu, a young man who revealed Israel's illegal nuclear program to the British Press...then he was lured to Paris, kidnapped, taken to Israel, jailed and remains a prisoner of the state long after his original sentence, unable to emigrate, like some slave owned by the state.
If I may ask, how are you going to help this chap?
Not causing trouble, just asking....
PS
Many people from different backgrounds and skill sets read ZH. I've no interest in this new Silk Road, but I do have interests in other matters.
Dumb government. Taxing it would have made more than that paltry amount of Bitcoin they seized. The amount they seized won't even cover the investigation and trial.
But what gov't wanted was the biz plan of how to do this themselves. Taxing it would have created competition. :)))
The Silk Road takedown is not about bitcoin.
This is about shares of black-market trafficking.
Had the Dread Pirate given TPTB "their fare share" of black-market proceeds, he could still be dealing freely today.
Like Al Capone, Kim Dotcom, Sean Parker, and many others,
Ross Ulbricht thought he could have his cake and eat it too,
without sharing the pie with TPTB.
Sean Parker learned from his mistake (Napster) and he "involved" TPTB in his other project- Facebook.
Should one of you ever become a super-successful entrepreneur,
when TPTB come knocking, you'd better answer the door and deal with them;
otherwise, "they" will take you down. And "they" will send govT employees to take you down.
(The strongest Mafia is called "the Govt".)
Did the poster above me really say: "dumb govt"?
Dumb Sheeple!
Bitcoin is silly and stupid. sorry.
Commenting on Bitcoin is like swimming in piranha infested waters, or talking smack about Apple.
I like the idea, problem is it is online over the Internet and we know how the NSA et.al. are working there.
I heard this back in 1992.
"http is silly and stupid. sorry."
-random genius on usenet, circa 1992.
What could be the answer to a currency which is designed to fail for over 300 million people? Do nothing? Just sit back and wait until the earned cash in our wallets isn't worth enough to pay the bills.
It's remarkable that leadership has not stood up and said this: Your dollar will be worth a peso by the time the Federal Reserve is finished with it's predatory approach to a national treasure via Ponzi economics" but they have not.
Gold, bit coin, stock up on food, hope the mtg owned by a TBTF bank will accept US currency when The Shit Hits The Fan. These WERE the choices.
This system in place is fighting people who are TRYING TO FIND A SOLUTION and that is more frightening to me than anything. This is a path of destruction.
By saying they plan on using inflation they have said that. Everything is going as planned.
No asset is safe, whether bitcoin or PMs, as long as a government can unjustly imprison you.
I am very surprised that this guy was living in the US.
He should have used that MEGA Dotcom guy as his model
He learned from Ron Paul what it means to be a free individual? Must be a terrorist.