
FBI Says It's Seized $28.5 Million in Bitcoins From Ross Ulbricht - tjaerv
http://www.forbes.com/sites/andygreenberg/2013/10/25/fbi-says-its-seized-20-million-in-bitcoins-from-ross-ulbricht-alleged-owner-of-silk-road/
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ihsw
Now the real question is -- where are they going to go from here?

* Few exchanges will be able to accommodate a 144.3K BTC transaction

* All transactions are public[1]

* The exchange(s) that broker this transaction will receive a massive amount of publicity

Now, it may end up being a bank looking to leverage the ownership of these BTC
for their own business dealings, and it could adequately obfuscate where the
BTC will go.

Keep in mind that the FBI's BTC address has been permanently tainted -- any
shady business that takes security seriously will _never_ do business with
that address. This disqualifies the usage of the BTC in sting operations (for
example).

[1] History of 'sends' for the FBI's BTC address:
[https://blockchain.info/address/1FfmbHfnpaZjKFvyi1okTjJJusN4...](https://blockchain.info/address/1FfmbHfnpaZjKFvyi1okTjJJusN455paPH?offset=0&filter=1)

~~~
nwh
> _Keep in mind that the FBI 's BTC address has been permanently tainted_

Well, no. Run them through any service with a shared wallet and they're
instantly clean. There's no way of tracing them after that point. If they are
put through a mixer, you'll end up discriminating against people that are
completely unrelated.

> _any shady business that takes security seriously will never do business
> with that address_

Almost all systems are automated and won't discriminate one coin from another.
Manually checking each input is a ridiculous idea, and destroys the idea that
all coins are equal.

~~~
ceejayoz
How many mixers would you trust with $30M in Bitcoins?

How many trustworthy mixers are going to want to be the service that mixed
$30M for the FBI, causing suspicion to be cast on all their other clients?

~~~
tel
Zerocoin? (Not that I think it's a viable option but instead because I believe
it was solving this exact problem and I'm curious, practically, how far away
the community is from implementing it.)

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kstop
"Wait! Now it's $50 million! Now it's $23 million! Now it's zero!"

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VMG
Link to the purported address:
[https://blockchain.info/address/1FfmbHfnpaZjKFvyi1okTjJJusN4...](https://blockchain.info/address/1FfmbHfnpaZjKFvyi1okTjJJusN455paPH)

I'm not sure you can call it "seized" if the balance hasn't moved to a
different address, which would be proof that they have ownership. Until then
they can claim they have found the money.

~~~
panarky
The bitcoins were moved to this address today, October 25. This is likely an
address controlled by the FBI.

~~~
aredington
As I read the article, the address is owned by DPR and the FBI seized the
associated wallet.

~~~
gojomo
Since they can't be sure DPR doesn't have a confederate or dead-man-switch
process somewhere with the private key, it's not good enough to seize/know his
key: they have to move balances to a new address that only they control.

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JohnTHaller
For the curious, this 114k seizure represents a full 1% of all bitcoins that
currently exist worldwide (0.7% of all bitcoins that will ever be produced).
I'd wager the US government won't be releasing them or selling them back into
circulation.

~~~
letney
Your 0.7% figure is slightly off. The total number of Bitcoins to be mined is
21 million, putting the percentage at slightly more than 0.54%
(114000/21000000).

~~~
JohnTHaller
I posted 114k in my post here, but it was 144k in the article. That was it :)
So it is 0.7%.

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fragsworth
What I'd like to know is _how_ they seized it. It requires they find his
private key - either Ulbricht made serious blunders when storing his private
key, or (paranoid) the FBI had some techniques to get it that we wouldn't
expect.

~~~
ceejayoz
"X years in jail if you give us the keys, X^2 if you don't" works nicely, I'd
imagine. Plea agreements are a very, very powerful - and potentially abusive -
tool.

~~~
fragsworth
Don't they usually make that public?

~~~
ceejayoz
Sometimes it comes out later. In this case, it may be to their benefit to sow
a little doubt over how they obtained it.

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gtrubetskoy
Really curious what FBI will do with the BTC they now have. Sell it for USD?
Devise a government process for storing seized Bitcoin?

~~~
MPetitt
Possibly use them in sting operations of more underground sites like the silk
road. Obviously as we've seen they are still going after dealers, hitmen, CP
and this would be a large enough fund of coins to do that from. The only issue
I see is how they would tumble and transfer them without everyone watching for
transactions out of the main account.

~~~
dmix
Yep these will be watched as closely as Sathoshi's (alleged) coins.

~~~
sillysaurus2
... which will be completely useless if they use a tumbler. It's only a matter
of time before feds become skilled techies. If they currently have anyone
remotely capable on their staff -- and let me remind you, they somehow managed
to acquire server images of Silk Road even though it was operating as a Tor
hidden service, so apparently they do -- then those technically-capable staff
members will strongly advise them to tumble those coins.

~~~
MPetitt
Which service will tumble 32 million worth of coins? And if they do them per
bust then people will still see a transaction of x amount leaving their
wallet.

~~~
dmix
Exactly, regardless if they tumble it, they still have to tumble it. Which
creates plenty of technical and legal challenges. I personally doubt they
would essentially launder their own seized money for future operations.

------
malandrew

        "FBI Says It's Seized $28.5 Million In Bitcoins From Ross 
        Ulbricht, Alleged Owner Of Silk Road"
    
        "It believes that the stash belonged to Ross Ulbricht, the 29-
        year-old who allegedly created and managed the Silk Road..."
    

The title and that sentence are in contradiction with one another. They either
seized it from him or they did not. If they did seize it from him, why are
they saying that they "think" it is his.

~~~
dragonwriter
> The title and that sentence are in contradiction with one another.

No, they aren't.

> They either seized it from him or they did not. If they did seize it from
> him, why are they saying that they "think" it is his.

Because possession ("from Ross Ulbricht") and ownership ("belonged to Ross
Ulbricht") are not the same thing. Its possible to have more certainty about
the former than the latter.

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mrb
_" the FBI may have seized the key to that [111,000 BTC] wallet and thus
gained control of the bitcoins, which they could transfer at any time to the
FBI’s own wallet. “They may have the key and just be keeping them at that
address,” says Meiklejohn. “That would explain what we wouldn’t have seen them
move."_

That would be extremely stupid for the FBI to do. If they don't immediately
transfer the coins, then anybody with a _backup_ of this wallet (eg. an
accomplice that has yet to be apprehended) could run away with the coins, even
after the wallet has been "seized".

So, unless the FBI is that stupid, it is almost certain that they have _not_
seized this secondary wallet of 111,000 BTC.

------
mchannon
As came out in the presses,
[http://upstart.bizjournals.com/money/loot/2013/10/08/fbi-
can...](http://upstart.bizjournals.com/money/loot/2013/10/08/fbi-cant-get-its-
hands-on-dread.html)

The consensus I've read is that until announced otherwise, somebody made the
announcement without realizing how seizures are supposed to work (It's akin to
me taking a copy of your bank statement and thinking I have wrested control of
your bank account from you). This may be that announcement but it sure seems
pretty limp evidence so far.

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syncerr
In order to "seize" ownership of bitcoins, the FBI would need to gain access
to his private bitcoin keys. Wouldn't it be possible to transfer all his
bitcoin to a different address with a private key that's encrypted? Wouldn't
such an action prevent a seizure?

EDIT: That's what appears to have happened.

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shocks
Supposedly the coins:
[https://blockchain.info/address/1FfmbHfnpaZjKFvyi1okTjJJusN4...](https://blockchain.info/address/1FfmbHfnpaZjKFvyi1okTjJJusN455paPH)

~~~
tel
Why did they do it in groups of 324?

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skeltoac
324 dials FBI.

~~~
saraid216
That honestly seems like an odd practice. Do they feel an obligation to signal
that they're the FBI?

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maxerickson
They do have a habit of putting on a show when they make a big arrest or
whatever.

~~~
saraid216
Yeah, but that's because people would claim they weren't doing anything if
they didn't.

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neals
So now even the FBI is saying these crazy virtual coins have actual value? A
great day for Bitcoin indeed!

~~~
macspoofing
Why would you need FBI validation? It's a fact that Bitcoins have value.

~~~
neals
Me? Not so much. Many people around me. Yes so much.

