US: Federal Agents Make Largest-Ever Bitcoin Seizure

Published: 29 October 2013


The United States Federal Bureau of Investigation (FBI) announced the seizure of US$28 million worth of Bitcoins from alleged Silk Road operator Ross William Ulbricht on Friday.

Bitcoin is a difficult-to-trace, decentralized digital currency used often by criminals to avoid authorities tracking illegal activity. Unlike conventional money, Bitcoins do not exist in the physical world but only as digital concepts. A statement from US prosecutors announced the discovery and seizure of a "wallet" containing the online currency on several pieces of hardware.

Prosecutors stated that the seizure, the largest of its kind, involved 144,336 Bitcoins, valued at about $28 million, in addition to the approximately 29,655 Bitcoins, worth almost $6 million, seized following Ulbricht's arrest on October 2. Ulbricht, 29, the alleged owner and operator of the trafficking website Silk Road under the alias "Dread Pirate Roberts", was arrested in a library in San Francisco while the Silk Road site was seized by the FBI.

Silk Road has operated as a hidden digital marketplace for illicit goods since 2011, utilizing Tor software and Bitcoins for anonymity and security. Users bought and sold illegal goods, primarily drugs, but also including fake IDs, erotica, and other products. According to The Wall Street Journal, Silk Road hosted sales involving 9.5 billion Bitcoins, valued at around $1.2 billion. The website reportedly collected commissions totaling 600,000 Bitcoins, while US investigators believe that Ulbricht earned more than $80 million while allegedly operating the platform.

Reuters reports that the value of Bitcoins dropped following Ulbricht's arrest. "They're going to be pouring all over his records, getting subpoenas for every piece of data and account he has ever used and trying to figure out who all these different dealers are," said Garth Bruen, a security expert at Internet consumer group Digital Citizens Alliance. "People are jumping ship."

Authorities were led to Ulbricht after a series on online breadcrumbs, including hints left on his LinkedIn, Google+, and YouTube profiles and a posting on the coding forum Stack Overflow. He also allegedly made a request to "beat up" and murder a former employee to an undercover FBI agent.

Ulbricht denied narcotics and money laundering charges following his arrest.