US Seizes $28 Million In Bitcoins From Man Linked To Online Drug Market 'Silk Road'
Federal prosecutors in New York said Friday that the 144,336 bitcoins, a digital currency widely used on the defunct site, were discovered on computer hardware belonging to Ross William Ulbricht, known online as "Dread Pirate Roberts," who was arrested October 1 in San Francisco and charged with various conspiracy counts. They said it represented the largest ever bitcoin seizure.
Ulbricht's lawyer could not immediately be reached on Friday evening, though he previously told reporters that Ulbricht denied the charges.
Since it began operations in 2011, Silk Road provided an anonymous site where drug dealers, counterfeiters and other criminals could shop for everything from heroin to hit men, according to the Justice Department.
More than 900,000 registered users of the site bought and sold drugs using bitcoins, according to authorities. The currency, which has been around since 2008, first came under scrutiny by law enforcement officials in mid-2011 after media reports surfaced linking bitcoins to Silk Road.
With nearly 30,000 bitcoins previously seized, federal agents have now collected more than $33 million in bitcoins, based on current value, the U.S. Attorney's Office in Manhattan said.
The seizures were carried out as part of a corresponding civil action against Silk Road and Ulbricht. Ulbricht, who is detained in California, is expected to appear within weeks in Manhattan federal court to face criminal charges of narcotics trafficking conspiracy, computer hacking conspiracy and money laundering conspiracy.
Court documents allege that Silk Road saw some $1.2 billion in bitcoins change hands during more than two years of operation and charged between 8 and 15 percent in commissions.
and more arrests and seizures looming globally .....
FBI makes record $28 million Bitcoin bust
US authorities have reported their largest-ever Bitcoin bust amounting to $28 million of the digital currency. It was seized from the owner of the controversial Silk Road website, which was shut down three weeks ago.
A Friday statement by federal prosecutors in New York details the seizure of 144,336 bitcoins, which were discovered on the computer belonging to Silk Road founder Ross William Ulbricht, alias “Dread Pirate Roberts,” Reuters reports. Ulbricht was arrested Oct. 1 in San Francisco on several charges of conspiracy.
Ulbricht’s lawyer could not be reached for comment, but the accused earlier denied all the allegations.
Since its inception in 2011, the now closed website was an anonymous hub for anything from drug deals to weapons and computer hacking programs – even hiring assassins, the Justice Department said.
The digital currency itself has been around since 2008, but it was not until 2011 that authorities showed greater interest in it, following the discovery of the connection to Silk Road and the near to 1 million registered users regularly engaging in illegal activities.
The current bust was part of a joint civil action against Ulbricht and his website. He is expected to appear in court in a matter of weeks to face charges of conspiring to traffic narcotics, launder money and hack computer networks.
Ulbricht’s arrest and the bitcoin seizure followed a string of international arrests of Silk Road users by Swedish, British and US authorities, a testament to the scale of the international crackdown on the website. The director of Britain’s newly-founded National Crime Agency (NCA), Keith Bristow, warned Oct. 9 that the “latest arrests are just the start” and “there are many more to come."
Bristow added that bitcoin will also now be closely watched, after his agency seized millions of pounds of the electronic currency.
Together with the previous figure of 30,000 bitcoins, the new FBI bust puts the current value of seized currency at $33 million, the US Attorney General’s Office said. In the two years Ulbricht’s website was in operation, about $1.2 billion in bitcoins were traded. Silk Road charged between 8 and 15 percent in commissions.
Following Ulbricht’s arrest and the seizure of 26,000 bitcoins from a public wallet, an FBI-linked public wallet was discovered by Reddit users the next day. The owner could not be identified for certain, but bitcoin users quickly seized the opportunity to use it as a platform for voicing their opinions about the FBI.
They made tiny donations to the wallet, dubbed ‘Silkroad Seized Coins’ on another website –Blockchain.info, which allowed them to post comments – the majority of them bashing the FBI for trying to“control” the bitcoin business instead of seeking justice.
But even now, weeks after Ulbricht’s arrest, it remains unclear what the FBI have actually “seized.” To use bitcoins someone must have a private password corresponding to each wallet.
The previous public wallet seizure was carried out easily because those bitcoins were at the less-protected escrow account of the website, Extreme Tech wrote at the time of Ulbricht’s arrest. Ulbricht’s estimated $80 million personal wealth in bitcoins has remained inaccessible to the FBI, and it also remains unclear what the FBI would do with the bitcoins if they did have access to them – as the US government refuses to recognize the currency as legal tender.
The authorities may be able to prevent Ulbricht from transferring the money, but without having the ability to access the bitcoins, seizing them is not much more than simply confiscating a computer.
The success of the Silk Road website was attributed to its operating on the encrypted Tor network, which made its dealings nearly impossible to trace. One transaction would also generate a vast number of fake ones with the purpose of masking the original buyer and seller – another effect of Bitcoin’s anonymous and decentralized nature.
Why do I smell a set up here.....
Head Of Fortress Recommends Investing In Bitcoin
At first glance, when the CIO of Fortress Investment Group says:
"Put a little money in Bitcoin...Come back in a few years and it’s going to be worth a lot."
One might think, the firm that manages $54.6 billion is advocating the end of the USD as we know it... Or is this more muppetry at work?
“Put a little money in Bitcoin,” Novogratz, principal and co-chief investment officer of macro funds at Fortress, said at a conference held today in New York by UBS AG’s chief investment office. “Come back in a few years and it’s going to be worth a lot.”Novogratz said he sees Bitcoin growing as a payment system, especially in developing nations. Novogratz said he has put his own money in the virtual currency, without specifying how much. He has not invested in Bitcoin on behalf of Fortress, which managed $54.6 billion as of June 30.“I have a nice little Bitcoin position,” Novogratz said.“Enough that I’m smiling that it doubled.”
However, color us a little skeptical at his advice...
Given that Bitcoin may ultimately make firms like Fortress - that rely on fiat specie - redundant, then doesn't the endorsement of Bitcoin by one of the world's largest Private Equity firms reek of the ultimate failure of BTC as a monetary construct, and seem much more to be merely an attempt by the firm to herd even more momentum chasers into a trade (ostensibly one for Novogratz P.A.) that will be then unwound with Bitcoins ultimately converted into the same dollar they are supposed to replace?
http://www.forbes.com/sites/kashmirhill/2013/10/23/five-possible-reasons-for-bitcoins-most-recent-surge/
Bitcoin breaks $200 again.
The price of Bitcoin is climbing as fast as Sandra Bullock’s post-Gravityreputation. It’s up to $200 – $219 USD on major Bitcoin exchanges, hitting highs it hasn’t seen since the spring. What’s driving the price up? I spoke with a few experts and analysts in the field for their takes. Here are five possible reasons for the fall frenzy:
1. Bitcoin is so hot in China right now.
“Bitcoin interest has risen tremendously in China over the last few months,” says Jered Kenna, CEO of Bitcoin trading platform Tradehill. The largest Bitcoin exchange in China is seeing ten times its usual trading activity, says Fred Ehrsam of Coinbase.
That’s potentially due to search engine giant Baidu(a.k.a. China’s Google GOOG -0.58%) decided to accept payment in Bitcoin for its Cloudflare-like Jiasule service. That impact of that “is probably overblown,” says Ehrsam. The service has received just 31 payments so far to its public Bitcoin wallet, totaling less than one Bitcoin, but it’s certainly led to greater visibility of the coin.
2. Bitcoin survived Silk Road’s fall.
Buying illegal things online is one of the most talked about uses of the cryptocoin. And the biggest marketplace to get those illegal things was Silk Road. When the feds took it down and arrested the alleged founder, Ross Ulbricht, 29, the price of Bitcoin briefly dipped, but quickly recovered. This may have reassured Bitcoin investors. The fact that the currency recovered is a sign that buying drugs isn’t the only thing people like to do with their Bitcoins. (There’s also wine and cupcakes you can buy with BTC.) Those wary of buying a drug currency may like that it’s harder to buy drugs with Bitcoin now (though there is a competitor hoping to take Silk Road’s place).
“I think a lot of investors are less afraid to get involved now that Silk Road is down,” says Ehrsam.
3. Everyone’s talking about Bitcoin because of Silk Road’s fall.
Publicity breeds investment excitement. Techie types aren’t the only people who know what Bitcoin are. The virtual currency is getting explainers in USA Today and segments on PBS Newshour, so even your grandma knows what a Bitcoin is now.
4. Silk Road’s seizure just took a bunch of Bitcoins off the table.
When the FBI took down Silk Road, they seized over 26,000 Bitcoin. They think that alleged founder Ulbricht may be sitting on up to 600,000 more. While I think that is unlikely, it would mean that the FBI would have 5% of Bitcoin potentially in its possession (if it can manage to possess it all).
“There’s less Bitcoin in circulation because of the seizure,” says Ryan Straus, an attorney at Riddell Williams whose work includes Bitcoin. “We don’t know what’s driving the price given the lack of transparency around ownership. But if there really is an increase in demand, it could be a function of the supply.”
5. Bitcoin is being touted as the next Twitter/Facebook FB +1.05%/LinkedIn LNKD +1.02% investment possibility.
Bloomberg BusinessWeek recently reported on the excitement in the venture capital community around Bitcoin businesses. Second Market which previously made it possible for people to invest in companies like Facebook before they went public, has now launched a Bitcoin investment vehicle.
“The Bitcoin Investment Trust (BIT) allows investors to get in to Bitcoin through an investment vehicle as opposed to a direct investment,” says Kenna. “This simplifies the process of investing in Bitcoin by solving the challenges of buying, storing and safekeeping bitcoins.”
Hopefully, Bitcoin fares better than Facebook’s stock.
Morning all,
ReplyDeleteInteresting bitcoin articles, bitcoin is back down to 183 this morning. I don't think the authors of either articles are fans though. I think Bitcoin is an additional alternative to fiat and a volitile and risky one at that. It has some good qualities though, limited issue, it's global, etc.
Morning Kev - you know the BitCoin post was assembled with you in mind ! I agree BitCoin is an alternative to fiat currencies , still have my doubts as to how stable BitCoin as a platform truly is. However , the concept of having alternatives to the USD and Euro is sound - china adopting BitCoin is a favorable development. So , we shall see what happens.....
ReplyDelete