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Bitcoin The Almighty Buck

Silk Road Bitcoins Worth $1 Billion Change Hands After Seven Years (theguardian.com) 73

Posted by BeauHD from the illicit-funds dept.
A billion dollars worth of bitcoins linked to the shuttered darknet market Silk Road has changed hands for the first time in seven years, prompting renewed speculation about the fate of the illicit fortune. The Guardian reports: Almost 70,000 bitcoins stored in the account which, like all bitcoin wallets, is visible to the public, had lain untouched since April 2013. The website was shut down by an FBI raid six months after they were deposited, and they have not moved since. Late on Tuesday night, however, the full amount less a $12 transaction fee was transferred to a new bitcoin address, records show.

"Through blockchain analysis we can determine that these funds likely originated from the Silk Road," said Tom Robinson, chief scientist at the cryptocurrency analysts Elliptic. "They left the Silk Road's wallet back on 6 May 2012 when they were worth around $350,000 and then remained dormant for nearly a year, before being moved ... in April 2013." From there, the funds have lain dormant. After the marketplace was shut down in late 2013, its founder and boss, 36-year-old San Franciscan Ross Ulbricht, was sentenced to a double life sentence plus 40 years without possibility of parole. The FBI managed to seize 174,000 bitcoins, then worth about $100m, but an estimated 450,000 earned by the marketplace remain unaccounted for.

Robinson says it is unclear who moved the money. "The movement of these bitcoins today, now worth around $955 million, may represent Ulbricht or a Silk Road vendor moving their funds," he said. "However, it seems unlikely that Ulbricht would be able to conduct a bitcoin transaction from prison." One possibility is that an individual or group has managed to "crack" the wallet, effectively guessing its password and stealing the funds. A file that some claimed was an encrypted bitcoin wallet containing the keys to the funds has been circulated in cryptocurrency communities for the past year, and -- if it is what it was claimed to be -- then a combination of brute computing power and good luck could have successfully decrypted the wallet.
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Silk Road Bitcoins Worth $1 Billion Change Hands After Seven Years More

Silk Road Bitcoins Worth $1 Billion Change Hands After Seven Years

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  • More likely the owner got spooked from the recent attention and moved the money out of it.

    • More likely the owner got spooked from the recent attention and moved the money out of it.

      What "recent attention"? The account was inactive for 7 years.

      • How is there a Bitcoin chief scientist? That seems pretty dumb. Perhaps chief Bitcoin autist would be a better title if all he does is watch Bitcoin transactions.
      • What "recent attention"?

        The article we're discussing?

        • Re: Cracked the wallet? (Score:4, Insightful)

          by Your Father ( 6755166 ) on Wednesday November 04, 2020 @09:37PM (#60685826)
          You want the real answer? There is so much news focused on the US election that now is exactly the right time for something like this to make a temporary splash and then disappear.

          I still think that chief Bitcoin scientist is a sad title to claim.

          • Re: (Score:3)

            by cusco ( 717999 )

            If you want to find the owner of the "missing" Silk Road bitcoins look at the group that shut the site down. Law enforcement has a long history of stealing money they're supposed to confiscate.

            • I said nothing about who took the bitcoins. All I did was point out the attention that other poster was somehow oblivious to. I have no opinion on who took it, but I guarantee this story will disappear in lieu of election stories.

          • Where are they going to find the computing power to try brute force passwords against a hashing algorithm? rediculous.

          • Ha, as if Bitcoin movement would have made national news if it weren't for the election.

        • The article we're discussing?

          I see.

          So the owner moved the bitcoins because of the article about the owner moving the bitcoins?

          • Re:Cracked the wallet? (Score:5, Funny)

            by tap ( 18562 ) on Wednesday November 04, 2020 @09:50PM (#60685848) Homepage

            The article we're discussing?

            I see.

            So the owner moved the bitcoins because of the article about the owner moving the bitcoins?

            He must have bought a time machine with the bitcoins! It's the only explanation.

          • Re:Cracked the wallet? (Score:4, Interesting)

            by StikyPad ( 445176 ) on Thursday November 05, 2020 @01:40AM (#60686334) Homepage

            FFS, he clearly meant the contents of the article we're discussing. The summary clearly mentions that people were actively trying to crack a wallet which was allegedly for the BTC address in question. If the wallet was valid and the owner got wind of it (due to said attention), then they may have moved the coins OR the wallet may have indeed been cracked (or something else entirely).

            Anyway, it wouldn't be difficult for Ulbricht to move the coins from jail at all... He would just need to give/tell someone how to access the wallet and they could move the coins for him. I guess they could just steal them, but they're pretty hard to use when you're in jail for several lifetimes, so it's not an exceptionally large gamble. Hell, he may have given the money to someone (mom, dad, whatever) knowing he couldn't use it, or maybe someone in prison convinced him to share the information [xkcd.com] .

    • Re: (Score:2)

      by brunes69 ( 86786 )

      There is quite literally nowhere the money can be moved that can be safe, because every single bitcoin transaction is traceable, by design. As soon as the money is exchanged for any good or service or currency, the recipient can be arrested. It's basically dead money.

      This is the ultimate irony of people using bitcoin as a supposedly safe way to do illegal transactions.. it is anything but.

      • There may be some state-sponsored recipients (outside of Western justice) that would consider taking on these Bitcoin. If the wallet were cracked, it might even be one of them that did it.

      • Can they not be sold on an exchange for a crypto that lacks such tracing ability?

        • Re: (Score:2)

          by brunes69 ( 86786 )

          No because any such exchange will then simply be subpoenaed for the information.

          And also before you ask - anyone exchange denominating funds of any sort in US dollars is immediately under US jurisdiction no matter where that exchange is located globally.

          • Subpoena the exchange all you want but once you start buying privacy coins that money is gone.

            • Re: (Score:2)

              by brunes69 ( 86786 )

              They don't care about the money. They care about shutting down the exchange itself and arresting who is running it.

      • Re:Cracked the wallet? (Score:5, Informative)

        by ShanghaiBill ( 739463 ) on Wednesday November 04, 2020 @11:50PM (#60686114)

        There are Cryptocurrency tumber services [wikipedia.org] available on-line. Also know as "mixing'.

        You give them a batch of bitcoins. They mix them with bitcoins from their other clients and transact them in tranches into new bitcoins. Then split them up and distribute.

        Obviously, you can't do this a billion dollars at a time, but splitting it into small batches should work.

        • Re: (Score:2)

          by brunes69 ( 86786 )

          Tumblers just make cryoto tracing marginally harder by creating a lot more transactions to trace

          They DO NOT in any way make it impossible, or even overly difficult for firms who specialize in this, or governments who have a lot of compute resources at their disposal.

          At the end of the day, the *entire premise* of blockchain and bitcoin is that everyone can see the ledger of every transaction. No transaction is ever private. The only privacy comes from the fact that you don't know who owns the wallet. But at

        • Re:Cracked the wallet? (Score:4, Insightful)

          by spikesahead ( 111032 ) on Thursday November 05, 2020 @09:24AM (#60687196)

          So why not start marking specific bits of coin as tainted?

          Every bitcoin is uniquely identified. If it's stolen, it becomes tainted. If it touches a bitcoin tumbler; also tainted. Publish the list of tainted currency widely. When the tainted coins enter our legal jurisdiction; seize them as the proceeds of crime from whoever is stupid enough to own them.

          That makes them worthless.

          • Re: (Score:2)

            by dj245 ( 732906 )

            So why not start marking specific bits of coin as tainted?

            Every bitcoin is uniquely identified. If it's stolen, it becomes tainted. If it touches a bitcoin tumbler; also tainted. Publish the list of tainted currency widely. When the tainted coins enter our legal jurisdiction; seize them as the proceeds of crime from whoever is stupid enough to own them.

            That makes them worthless.

            Good luck with that. The only powerful enough force to force governments/banks/exchanges to comply with this is the threat of US sanctions, and there are still a handful of countries and banks that don't care, or don't notice, if they break sanctions.

            • I specifically said 'enter our legal jurisdiction', IE anywhere that any participating government can go in with a pair of cuffs.

              By making a 2nd tier of bitcoin that only works in corrupt areas you don't eliminate the value entirely, but the value of those tainted coins becomes significantly reduced and the motive for participating becomes significantly damaged.

              This is no different than a bank giving a bank robber a stack of marked, sequential bills. Traceable money is by and large worthless to criminals, a

          • When the tainted coins enter our legal jurisdiction; seize them

            You appear to have absolutely no idea how cryptocurrencies work.

            How would you "seize" encrypted bits?

            You could make a copy. But without the private key, that would mean nothing.

            The owner of the bits would still have other copies and the private key so could do as they wish with their bitcoins.

      • As soon as the money is exchanged for any good or service or currency, the recipient can be arrested. It's basically dead money.

        Unless 7 years was the point at which the statute of limitations ran out. If so, "take possession" of the coins (i.e. transfer to your account, obvious the original account was "not yours"), declare them and pay taxes, you're good.

        • Or perhaps a jail sentence was completed, or corporate fiscal records discarded. 7 years is a popular threshold for discarding various business records in the USA, at least.

      • Yep. The headline should read, "Silk Road Bitcoins Theoretically Worth $1b Change Hands".

        Those particular coins are not going to be worth $1b anytime soon. There will not be $1b worth of goods or services that they could be traded for.

        • Lol, and now it turns out it was the US DOJ/IRS who got them.

          Still, I'm not sure they actually get that value for them, but it's at least more possible for the government than a criminal.

        • Re: (Score:1)

          by uufnord ( 999299 )
          IMO, the headline should read "Silk Road Bitcoins worth 70,000 BTC Change Hands", or how about "70,000 BTC tied to Silk Road have Changed Accounts". Making the exchange rate part of the story only adds to the sensationalism.

      • Honestly, your naivety is surprising. "As soon as the money is exchanged ..." yeah, there are entire criminal enterprises dedicated to anonymizing money. Purchasing objects, reselling them. Actually having people make cash withdrawals and redepositing them elsewhere (in differing amounts). As long as the electronic trail is broken, then it becomes impossible - without on-the-ground investigation - to determine where the money has gone.
        Speaking as someone who has had to deal with money laundering profess

      • Re: (Score:1)

        by uufnord ( 999299 )

        Wallet A contains 111 BTC. Wallet C contains 222 BTC. Wallet B is newly-created and empty.

        Alice owns/has the private key for wallet A. Charlie owns wallet C.

        Alice transfers 1 BTC to wallet B, leaving 110 BTC in his wallet.

        Some time later, 1 BTC transfers from wallet B to wallet C, giving Charlie 223 BTC.

        Who owned wallet B?

        • Re: (Score:2)

          by brunes69 ( 86786 )

          If the 111 BTC was illegal gains, then Charlie (who in this case is a cryptocurrency exchange) can be arrested and/or the BTC seized. It is completely irrelevant how many middlemen the money went through, the law does not care at all. Washing currency only works BECAUSE it is cash. You can't actually wash BTC, it is impossible, because every transaction is traced.

    • Change Hands After Seven Years

      It's right in the headline; whales shifting their worthlessness from one hand to the other.

    • Its Donny boy - getting ready to do a runner now he doesnt have anythinbg to bring to the table for his russian masters.
  • Trump should pardon Ulbricht as part of the long list of people he's set to pardon as he leaves office. Ulbricht provided a service that had a ready market. Basically, he's an entrepreneur like Trump.

    • Re: (Score:2)

      by tap ( 18562 )

      Maybe a pardon costs $1 billion in bitcoin? The pardon market only opens for a brief window every 4 or 8 years and it looks like one of those windows will be opening shortly.

  • Transferred to Trump

  • Who needs to load a plane up with gold like a fleeing dictator when you can just arrange the FBI to transfer bitcoins somewhere for you?

  • Orrrr as Ross Ulbricht had testfied before he was sentenced to life, the dpr account was REALLY being used by more than one person as it's namesake suggests.

  • wild wild west (Score:5, Insightful)

    by hdyoung ( 5182939 ) on Wednesday November 04, 2020 @11:20PM (#60686064)
    Seems like every 2 months there's a story about some bitcoin exchange being robbed, or the owner disappearing with wallet, or something like this. This is what people are proposing as the next model for a world currency? Yea, no thanks. I'll pass.

    Feel free to live in a world where someone can pull a billion dollars from you by simply guessing your password. I'll stick with FDIC-insured banks and investment houses with decades of integrity to back their word that my money won't evaporate overnight. Strangely enough, 20 years of retirement investments have somehow managed to grow at a nice annual clip and the account hasn't once been mysteriously emptied on me. Yeah, definitely gonna stick with that.

    • I'll stick with FDIC-insured banks and investment houses with decades of integrity to back their word that my money won't evaporate overnight.

      Not that I disagree with you necessarily, but FDIC-insured banks would insure .025% of this amount, and SIPC insured investment houses would insure at most twice that.

    • Re: (Score:2)

      by AmiMoJo ( 196126 )

      You don't have to use an exchange, you can just keep the coins on a USB stick. Probably wise to have a backup if you have a billion Dollars on it.

      And look at this transaction: They were able to transfer a billion to anywhere in the world for just a $12 transaction fee, and it's thus far anonymous. Nobody knows who owns either wallet and as long as they take security seriously nobody ever will. Converting it to real-world currency is risky but doable and they could be well beyond the reach of the FBI when th

    • You don't have a clue what you're talking about. Yeah if you leave coins in an exchange they are in a wallet out of your control. That's why you cash out when you're done trading. Nobody has stolen a billion dollars by guessing a password either.

      • Yeah, admit that I don't completely understand the full Bitcoin system. I read the original paper and understand the general structure, but my CS isn't good enough to grasp the fundamentals of the SHA algorithm. I probably could if I put 5-10 hours of effort into it.

        I kind of feel like the responses here are simply reinforcing my point. You're suggesting that people need to cash out after they are done trading? That's like a bank that's so unstable that I need to CASH OUT once I'm done transacting, b

    • Re: (Score:1)

      by Anonymous Coward
      I agree, anyone who is not tech literate should stay away from bitcoin.

    • I wonder how much Bitcoin is used for shady business vs legitimate?

      I would say way more the former than the latter.

      Yes, the twinkle eyed, bushy tailed amongst us thought "bItCoIn wIlL cHaNgE tEh wOrLd!". Instead we got some overhyped "world changing" product that is much more of a disappointment than the Segway.

  • Statute of limitations (Score:3)

    by sound+vision ( 884283 ) on Thursday November 05, 2020 @12:25AM (#60686170) Journal

    I think most criminal charges in the US can't be pursued once 7 years has elapsed. If it's been a full 7 years, particularly an exact 7 years, it could be someone moving to cash it out. I don't see any way to cash out that much BTC without being identified, but if the crimes were 7+ years ago, it might not matter anymore.

    • This depends on the crime and jurisdicton of the crime. Different states and cities have different laws. The primary legal justificaiton for such limits is to prevent prosecutors from from using data which may have deteriorated, against defendants whose evidence of innocence may also have deteriorated over time. Eyewitness testimony is particularly unreliable over long periods, and the risk of convicting innocent people correspondingly greater. There was a horrific case of this involving sex abuse accusatio

  • ...so close to this election weirdness makes me worry it was a payment for something big and bad.

  • "However, it seems unlikely that Ulbricht would be able to conduct a bitcoin transaction from prison."

    Yeah, telling somebody a password with a note, a personal visit or a phone call is physically impossible in prison.
    Not to mention illegal cellphones.

    • "Yeah, telling somebody a password with a note, a personal visit or a phone call is physically impossible in prison.
      Not to mention illegal cellphones"

      Gang shotcallers who are in solitary manage to give their members who are on the streets orders, as well as recieve intel on what is going on on the outside. Even with prison guards checking for hidden codes and stuff hidden between the layers of greeting cards.

      So sending out a password is no problem.

  • From Wired [wired.com]:

    The DOJ today filed a civil forfeiture complaint over 69,370 bitcoins—and other variants of the cryptocurrency—seized on November 3 from an unnamed person who court documents refer to only as Individual X. According to the IRS's criminal investigation unit, Individual X successfully hacked the Silk Road sometime between May of 2012 and April of 2013, stealing that abundance of drug money from the dark web site's bitcoin addresses before Ulbricht's downfall in October of 2013. The IRS says it has finally tracked down the hacker who stole the Silk Road's nearly 70,000 bitcoins—now worth more than $1 billion—and allowed law enforcement to take control of those funds.

    "The successful prosecution of Silk Road’s founder in 2015 left open a billion-dollar question. Where did the money go?" wrote US attorney David Anderson in a statement announcing the seizure. "Today’s forfeiture complaint answers this open question at least in part. $1 billion of these criminal proceeds are now in the United States’ possession.”

    Stolen from Ulbricht by a hacker who then gave them up to the Feds.

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