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Friday, 06 November 2020 07:17

US seizes billion-dollar digital currency stash linked to Silk Road Featured

US seizes billion-dollar digital currency stash linked to Silk Road Image by Aaron Olson from Pixabay

A cryptocurrency stash worth nearly US$1 billion (A$1.37 billion) has been seized by American federal authorities on Tuesday and court action has been launched seeking forfeiture of the cache.

The bitcoin in question is said to belong to Ross Ulbricht, founder of the dark web marketplace Silk Road which was taken down in 2013. Silk Road was the most sophisticated marketplace for criminals on the dark web.

Ulbricht was found guilty of seven criminal counts in 2015 and given a double life sentence.

The existence of the bitcoin cache was first noticed by Alon Gal, chief technology officer at Israel-based cyber crime intelligence company Hudson Rock, who tweeted in September that a a bitcoin wallet was being passed around by hackers during the last two years with no success in cracking it.

On Thursday, Gal tweeted about the fact that the wallet had been moved from its original address, saying: "The address that moved $1,000,000,000 worth of Bitcoin yesterday is possibly linked to Silk Road. If it was done by the owner/owners, it was probably done due to the headlines of my reports."

The US Department of Justice said in a media released on Thursday that it had filed a bid for forfeiture of the bitcoin stash which was filed in the US District Court of the Northern District Of California.

The court document said: "In 2020, law enforcement officers used a third party bitcoin attribution company to analyse bitcoin transactions executed by Silk Road. From this review they observed 54 transactions that were sent from bitcoin addresses controlled by Silk Road, to two Bitcoin addresses."

It said these transactions were done by someone called Individual X - whose identity the government knew - who stole the cryptocurrency from Ulbricht.

"According to the investigation, Ulbricht became aware of Individual X’s online identity and threatened Individual X for return of the cryptocurrency to Ulbricht. Individual X did not return the cryptocurrency but kept it and did not spend it," the document said.

The background to the Silk Road takedown was provided in the court document and based on this, the government said it was reasonable to assume that the bitcoin stash represented proceeds "traceable to computer hacking" which was illegal under American law.

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Sam Varghese

Sam Varghese has been writing for iTWire since 2006, a year after the site came into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.

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