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United States Bitcoin The Almighty Buck

US Government To Convert Silk Road Bitcoins To USD 408

Posted by samzenpus
from the real-cash dept.
angry tapir writes "The founder of the Silk Road underground website has forfeited the site and thousands of bitcoins, worth around $28 million at current rates, to the U.S. government. The approximately 29,655 bitcoins were seized from the Silk Road website when the Federal Bureau of Investigation (FBI) moved to close it in late September. 'The United States Marshals Service shall dispose of the Silk Road Hidden Website and the Silk Road Server Bitcoins according to law,' wrote Judge J. Paul Oetken, of the U.S. District Court for the Southern District of New York, in a court order that was issued this week. The ruling represents the largest-ever forfeiture of bitcoins. 'It is the intention of the government to ultimately convert the bitcoins to U.S. currency,' said Jim Margolin, a spokesman for the U.S. Attorney's office for the Southern District of New York."
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US Government To Convert Silk Road Bitcoins To USD

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  • by Kaenneth (82978) on Friday January 17, 2014 @04:13AM (#45983547) Homepage Journal

    No, but his money and property has.

    Civil Forfeiture law is insane.

  • by Anonymous Coward on Friday January 17, 2014 @04:45AM (#45983707)

    They aren't being blocked because they are currently held to the US government, they are being blocked because they were stolen. Sure, maybe if it were only a few bitcoins nobody would care. But millions of dollars worth? That's not a small amount of money. Worse yet, it would be damaging to bitcoins and other cryptocoins. If they went through with this and actually cashed in that much at once, the value of bitcoins would tank like never before.

  • by angel'o'sphere (80593) on Friday January 17, 2014 @04:51AM (#45983731) Homepage Journal

    You might be surprised, but here in germany US dollars are no legel tender either.

  • by wvmarle (1070040) on Friday January 17, 2014 @05:09AM (#45983791)

    Not likely.

    The US prosecution already decided that The Silk Road is an illegal venture, and on those grounds they have seized the property linked to it. This is exactly the same grounds on which they can seize say a boat load full cocaine, plus the stack of cash that's on the same vessel.

    A totally different issue is to find and prosecute the individuals responsible for running the venture (e.g. those operating the boat or responsible for the cocaine on board). These people may in turn also have property linked to the illegal venture, which then may be seized as well (I don't know what US law says about that).

    Now if the person is found not guilty, he can prove the seized bitcoin (and possibly other property) are his, and that the operation was in fact not illegal or that the seized property was not linked to that operation, then he may be able to get back his property.

  • by Njovich (553857) on Friday January 17, 2014 @06:12AM (#45984027)

    According to bitcoincharts.com, trading volume in the past 24h was over 540k bitcoins. Not sure what part of that is from exchanges, but I doubt 30k extra bitcoins are going to really be earth shattering. I could be wrong though, Bitcoin prices are volatile and this kind of news can affect things and cascade.

  • by michelcolman (1208008) on Friday January 17, 2014 @07:30AM (#45984365)

    Right now, I can't buy groceries with BTC.

    Wrong. Whole Foods accepts bitcoin.

    I can't take a friend out for lunch and pay with BTC.

    Wrong again [bitcoin.it]

    I can exchange BTC for my local currency and then go about my business, but that's about it.

    Overstock.com, Amazon, CVS, Target, Victoria's Secret, Zappos, the list keeps growing.

    Of course most of these stores actually use a payment processor that immediately converts the bitcoins to USD for them, but if more and more stores start accepting it, at some point the currency may become so practical that such conversions will no longer need to be made. If a company does business with another company that accepts bitcoin, they may as well take bitcoin from their clients and then use those bitcoins to pay their suppliers. Transaction fees are much lower than those for credit cards, you don't even need any middle men.

  • by SirGarlon (845873) on Friday January 17, 2014 @09:32AM (#45984963)
    Well, presumably you would need a US attorney and a Federal judge to _agree_ that it's connected to illegal narcotics. TFA makes a couple of relevant points:

    The bitcoins that Ulbricht forfeited are a fraction of the total amount seized by the government in connection with the case.

    What the article doesn't say is why these assets have been seized, ahem, "forfeited," already, and what legal process was involved. I'll understand if you don't give the Federal government the benefit of the doubt, and assume the legal process was the prosecutor saying "those are mine, thanks." ;-)

    TFA does say:

    The government still holds an additional 144,336 bitcoins, worth around $130 million at present, and has asked a court to order the forfeiture of those assets, too. Ulbricht filed a claim contesting the government's move

    (emphasis added). So it looks like there is a legal process going on to seize more assets, in parallel with the criminal trial, and Ulbricht has some right to be heard in court before the rest of his Bitcoins get seized.

    I do agree, though, that this looks like an erosion of the presumption of innocence, which combines poorly with rapidly-growing Federal authority.

  • by hubie (108345) on Friday January 17, 2014 @09:54AM (#45985169)

    A forfeiture worth ~$28M is surely news?

    I think the only reason it is news on this site is that it involves bitcoin. $28M isn't too particularly noteworthy when compared to other cash seizures, particularly drug arrests. In relation to general asset seizures, Bernie Madoff's seized assets were reportedly worth around $826M.

  • by martin-boundary (547041) on Friday January 17, 2014 @09:57AM (#45985197)

    Replace BTC with USD in your entire statement, and you'll have your answer as to why everyone (including governments) sees the USD as some sort of "magically universally accepted currency".

    Totally. wrong. The magic words that exist on USD and don't exist on BTC are "legal tender". It means the bad boys with guns of the US government protect the purpose of your USD's on US soil, as a means of exchanging goods and services. In other words, currencies become accepted because regional powers are willing to kill, maim, and imprison if need be to make it so.

  • by Registered Coward v2 (447531) on Friday January 17, 2014 @10:14AM (#45985391)

    The government sells their surplus office chairs. Office chairs aren't tender.

    The government sells radio channels. Radio channels aren't tender.

    The government sells bitcoins. Bitcoins aren't tender.

    Legal tender is whatever type of payment you are REQUIRED to accept. If you eat at a restaurant and when the bill comes you try to pay with a check, they can say "we don't accept checks." If you refused to pay with anything other than a check, they could call the police or sue you for the $12. They can also say "we don't accept credit cards.". They HAVE to accept cash. If they refused your cash and then tried to sue you, the judge would laugh and tell them to read the $20 bill. It says right on the bill "this note is legal tender for all debts, both public and private.". That means you can't refuse cash and then claim that someone didn't pay. THAT is legal tender.

    Actually, they are not required to accept cash in payment either. They could say "We only accept Visa cards." I would guess if they didn't put a restriction on accepting cash so that you knew prior to paying then a judge might say they have to accept it since the presumption would be they accept cash since sit is legal tender and most places do; but that is different than saying the are required to accept it.

    Cite from treasury.gov:

    Legal Tender Status

    I thought that United States currency was legal tender for all debts. Some businesses or governmental agencies say that they will only accept checks, money orders or credit cards as payment, and others will only accept currency notes in denominations of $20 or smaller. Isn't this illegal?

    The pertinent portion of law that applies to your question is the Coinage Act of 1965, specifically Section 31 U.S.C. 5103, entitled "Legal tender," which states: "United States coins and currency (including Federal reserve notes and circulating notes of Federal reserve banks and national banks) are legal tender for all debts, public charges, taxes, and dues."

    This statute means that all United States money as identified above are a valid and legal offer of payment for debts when tendered to a creditor. There is, however, no Federal statute mandating that a private business, a person or an organization must accept currency or coins as for payment for goods and/or services. Private businesses are free to develop their own policies on whether or not to accept cash unless there is a State law which says otherwise. For example, a bus line may prohibit payment of fares in pennies or dollar bills. In addition, movie theaters, convenience stores and gas stations may refuse to accept large denomination currency (usually notes above $20) as a matter of policy

Whenever a system becomes completely defined, some damn fool discovers something which either abolishes the system or expands it beyond recognition.

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