A $US1 ($1.4) billion transaction that flowed out of a dormant bitcoin wallet allegedly belonging to Silk Road founder Ross Ulbricht made waves in the crypto world this week, causing some to suspect the founder himself was making moves from prison. No such luck, however: It was the Department of Justice seizing the dark market’s gains in a move akin to repossessing a mobster’s (very expensive) yacht.
The wallet, which was associated with the underground drug and weapons market called the Silk Road, sat quiet since 2013. Accessible only with a private key, the money slowly gained in value and as bitcoin hit a high of $US15,000 ($20,637) this week, it looks like the DOJ wants to cash out.
“Silk Road was the most notorious online criminal marketplace of its day,” United States Attorney David L. Anderson said in a statement. “The successful prosecution of Silk Road’s founder in 2015 left open a billion-dollar question. Where did the money go? Today’s forfeiture complaint answers this open question at least in part. $US1 ($1.4) billion of these criminal proceeds are now in the United States’ possession.”
When Ulbricht went to jail in 2015, the IRS began analysing inflows and outflows to wallets associated with the Silk Road. Like web addresses, wallets have unique IDs, and while they can’t be traced to any one person they can be analysed for connections to known wallets. In this case, the $US1 ($1) billion came from a hacker — called Individual X in a DOJ press release — who had broken into the Silk Road’s servers and stolen BTC from the site. Individual X allegedly turned the funds over to the DOJ.
“At the time it was taken down in 2013, Silk Road had nearly 13,000 listings for controlled substances and many more listings offering illegal services, such as computer hacking and murder for hire, which generated sales revenue totaling over 9.5 million Bitcoins and commissions from these sales totaling over 600,000 Bitcoins,” wrote the DOJ.
“Criminal proceeds should not remain in the hands of the thieves. Through CI’s expertise in following the money, we were able to track down the illicit funds,” said IRS-CI Special Agent in Charge Kelly R. Jackson.
The BTC is now U.S. property. Looks like Ulbricht, a bold libertarian, finally paid his taxes.