US Seizes $1B In Bitcoin Stolen From Darknet Marketplace Silk Road's Founder

The United States Department of Justice has seized Bitcoin worth more than $1 billion associated with the illegal Silk Road marketplace.

What Happened: The seized cryptocurrency, about 69,000 bitcoins, belonged to the founder of Silk Road — Ross Ulbricht — who was convicted of distributing narcotics and money laundering in 2015, the Justice Department said in a statement.

The federal agency said that the cryptocurrency had been stolen from Ulbricht in or around 2012 and 2013 by a hacker, who left the bulk of the bitcoins untouched in a wallet but cashed a part of the original stash.

The seizure resulted due to the efforts of the Justice Department and the Internal Revenue Service’s criminal investigations unit along with two bitcoin-analytics companies — Chainalysis and Excygent.

Details regarding the hacker, known as “Individual X” were not available but in a complaint filed by the U.S. attorney, the prosecutors that the person signed an agreement with the U.S. Attorney's Office in North California agreeing to forfeit the property to the United States government. 

Why It Matters: While it was thought that Silk Road generated commissions to the tune of 600,000 bitcoins, at the time of Ulbricht’s arrest in 2013 only 175,000 bitcoins were ever recovered by the authorities.

The latest seizure partly answers the question of what happened to the remainder of the funds, according to the Justice Department, which described the latest action as "the largest cryptocurrency seizure to date."

The government has not indicated what it intends to do with the bitcoins, now worth more than $1 billion, but it is likely that it may sell the cryptocurrency in multiple tranches, as has been usual in past such instances.

Elliptic co-founder Tom Robinson had earlier made note of the movement in the wallet but said he couldn't ascertain if the bitcoins were still under the control of Ulbricht.

Bitcoin price is shooting up, trading 11.8% higher at $15,808.40 at press time. The cryptocurrency in the wallet has remained out of circulation for over five years and is unlikely to have an impact on Bitcoin's price movement until it is sold-off in an auction by the U.S. government and brought back to the open market.

Photo by Jürg Kradolfer on Unsplash