The Drug Enforcement Agency has seized 11.02 Bitcoins -- about $800 -- from a drug dealer in South Carolina who had been using Silk Road. It's the first (known) time the US government has taken control of the virtual currency like it was property or real-world cash.
Discovered by Bitcoin bloggers in a US government press release, the news relates to the arrest of Eric Daniel Hughes. One Bitcoin user tied the arrest of Hughes to usernames "Casey Jones" and "Truckin" on Silk Road -- where it appears he was an active buyer and seller.
Silk Road has so far offered drug dealers relative anonymity, allowing them to use Bitcoin and Tor to avoid having their identities revealed. Hughes' posts on the site referred to drugs such as Adderall, Dexedrine, Vyvanse, Klonopin, Clonazepam and suboxone. One user, DealerOfDrugs, described his interactions with Hughes on Silk Road:
The crazy thing is, he messaged me from his vendor account, and willingly gave me his entire personal address, not a drop address. I myself warned Casey at the time to be careful because anyone at anytime could blackmail him, and he pretty much dismissed the idea and said "no problem, I might start a alternate buyer account to start buying. I'm not worried about it." It's unclear whether the agency seized the Bitcoins in a sting operation or through some other means. It's possible that the DEA set up a seller account and got Hughes's address under the pretense of sending him a purchase. However, it's also possible that the DEA seized a computer with the file containing the Bitcoins or got Hughes to hand them over.
Clearly, the DEA is aware of the problems posed by Silk Road -- and the seizure of Bitcoins suggests that it may not be the safe haven people have gotten used to for much longer. [Let's Talk Bitcoin via The Verge]