Bitcoins Seized by DEA

http://letstalkbitcoin.com/post/53700133097/users-bitcoins-seized-by-dea

by ferdo • 13 years ago

213 121 13 years ago

teraflop• 13 years ago

One thing's for sure, it'll be interesting to follow the blockchain and see what eventually happens to that BTC. Does the government leave it in a wallet, or cash it out with Coinbase, or what?

ferdo2• 13 years ago

The coins appear to have moved a few times since the "seizure":

https://blockchain.info/tx/ec3c6440a5302eade99c3be3dbe475243...

hackinthebochs• 13 years ago

Of course they have to be moved to really be considered "seized", otherwise they just have a copy which can be invalidated before they control the value of the coins.

jlgreco4• 13 years ago

One of the neat things about bitcoin that hasn't been talked a lot about is that bitcoin makes it possible (with a little planning) to create seizure and "civil forfeiture" resistant money. This can be done if you want to save your money for later (perhaps for your defense, or for after your eventual release), or alternatively merely because you believe that civil forfeiture is unethical and dangerous to society as it accelerates the militarization of the police.

Imagine a system where the private material of a wallet is shared among one or more trusted individuals (using secret sharing) who are under instructions to cooperate with each other in destroying or moving the money if you are ever arrested or fail to check in after a certain period of time. If your aim is to merely destroy the money, you could also get away with having a secret VPS running somewhere that does the deed (it would not matter if it were later found).

If you go with the "destroy" route, then you would not even be destroying the evidence from an ethics standpoint (thanks to the nature of the blockchain). However the authorities, upon being denied their "prize", would undoubtedly throw a childish hissyfit and assert that you destroyed the evidence anyway.

betterunix• 13 years ago

"One of the neat things about bitcoin that hasn't been talked a lot about is that bitcoin makes it possible (with a little planning) to create seizure and "civil forfeiture" resistant money"

Sounds like burying your cash on an island. I think you might be able to publish an exciting novel about this...

anigbrowl9• 13 years ago

Don't you think that people involved in money-laundering already engage in such conspiracies? There's a reason they call it 'organized crime.'

MWil• 13 years ago

As a bar prepping J.D. at the moment, I just want to see how this plays out in a courtroom where the prosecution relies too heavily on bitcoins as their ID strategy. I'll totally let them try and explain this to a jury...

gamblor956• 13 years ago

Probably just as well as any other form of circumstantial technology-based ID: IOW, it depends on the expert witnesses and the presentation of other identifying evidence by the prosecution.

Uperte• 13 years ago

Probably honeypot operation. I wonder if DEA would auction those coins like all assets that get seized.

gwern3• 13 years ago

No, it was probably fallout from a controlled delivery or something. There have been multiple controlled deliveries in the past for SR users and so far zero honeypots or other fancy traps (see my collation of arrests/prosecutions in http://www.gwern.net/Silk%20Road#safe ).

gwern3• 13 years ago

Although he is a vendor, so who knows: http://www.reddit.com/r/SilkRoad/comments/1gxiv7/srrelated_b...

hawkharris• 13 years ago

I have a layman's question about Bitcoin for people who know more about the currency: Who or what controls the overall monetary policy for Bitcoin?

In other words, is there some sort of digital central bank that controls inflation by deciding how many Bitcoins are released per area?

ojiikun• 13 years ago

There is no authority, just code. The algorithm essentially self-adjusts so that new coins are created at a globally steady rate, rewarding miners proportionate to their effort. (at least until all coins are mined)

https://en.bitcoin.it/wiki/Difficulty

jared314• 13 years ago

Also, it is good to mention, that to change the code/algorithm would require replacing the code on the peers accounting for 50% of the network's hashing power.

thomasbk4• 13 years ago

The mining pools (groups of miners who've joined forces) control it in practice. This effectively gives a very small number of people control over significant things, like transaction fees.

fnordfnordfnord2• 13 years ago

But anyone can mine, so it would be difficult for miners to say, form a cartel and jack up transaction fees.

ensignavenger• 13 years ago

But if the managers of the mining pools were to do anything too overt, those who contribute computing power to them could (and probably would) quickly pull their support. At least in theory.

redthrowaway• 13 years ago

No one. Miners compute cryptographic hashes based on the previous block in the blockchain plus a nonce. If the hash starts with a number of zeroes (currently 7), it is considered valid and the miner who computed it is rewarded with a chunk of bitcoins by the network. Only 21M BTC will ever be mined (although each BTC is composed of 10^8 Satoshis, which are the actual "unit" of transaction).

As more BTC are mined, the difficulty of finding new ones increases and the reward decreases. Once the difficulty goes up, only those hashes that begin with 8 zeroes will be considered valid, so it will take twice as much effort to find a valid one. Currently, a successful block nets 25 BTC to the miner, down from 50 a while back. Soon, it will drop to 12.5 BTC.

Bitcoin is, by design, deflationary. All other things being equal, the value of a Bitcoin will continue to rise as the pool of unmined coins shrinks. There is no central authority, rather inherent scarcity and the effort required to mine the coins gives value. The exchange rate of BTC -> fiat is determined by the market, operating on exchanges such as Mt Gox. There is no mechanism for anything outside of market effects to alter the price or availability of Bitcoin.

eru• 13 years ago

Bitcoin is, by design, deflationary.

No, they have a very carefully controlled (and diminishing) inflation of the money supply.

colanderman• 13 years ago

USER'S, not USERS'.

Very meaningful difference here.

ferdo2• 13 years ago

You're correct. Thanks for catching it.

mikemoka• 13 years ago

The coins of a specific user have been sized, why this sensationalistic title?

Estragon• 13 years ago

I understood exactly what had happened the moment I read the title. I don't think it was sensationalistic at all.

mxxx• 13 years ago

lol, you interpreted it to mean that bitcoin itself had been seized? do you freak out and check your wallet when you read a headline that says "cash seized by authorities", too?

fastball• 13 years ago

Wouldn't this being a "honeypot", as suggested in the article, be an instance of entrapment, which is illegal?

nilved2• 13 years ago

No, it's only entrapment if you wouldn't have commit the crime with someone else. Buying drugs from an undercover cop, which is basically what the OP describes, is not entrapment.

pklingem• 13 years ago

You mean like: `honeypot = Entrapment.new`?

anigbrowl9• 13 years ago

No. entrapment is where I work for the government and try to persuade you to commit a crime. If I merely present an opportunity to do so (eg leaving my car unlocked with an expensive item sitting on the back seat), that's perfectly cool, legally speaking.

cs702• 13 years ago

As an early adopter of Bitcoin, I'm happy to see this, because it's a sign that Bitcoin is on the path to more mainstream US market adoption. As more US citizens get comfortable with and start using Bitcoin, US law-enforcement organizations gradually will learn to use it, gradually will learn to monitor its use by others, and, yes, gradually will learn to seize it whenever it's used for criminal activity.[1] This is not a bad thing.

[1] Bitcoins can be seized -- just like cash, gold, a file stored in a hard drive, or any other physical or digital asset in a person's possession.

nilved2• 13 years ago

Considering the entire point of bitcoin is circumventing seizure, that sounds like a bad thing to me.

biomechanica2• 13 years ago

If people store their coins on a central server it can happen like any other data.

Bitcoin, however, can be used without the use of a third party storing your coins.

sneak• 13 years ago

Well, if you generate a deterministic key based on a passphrase known only to you, and send the bitcoin to the corresponding public key, you can store bitcoin using ONLY YOUR MIND.

Seize that.

tlrobinson4• 13 years ago

"the entire point of bitcoin is circumventing seizure"

[citation needed]

There are many reasons to want to use Bitcoin.

Plus it is much more seizure resistant than centralized systems like banks.

zanny• 13 years ago

Password encrypt your wallet and nobody is cracking AES256 with a good passphrase any time soon unless they torture it out of you. And keep a backup copy hidden somewhere so that if they just take the wallet.dat file you have a clone.

noarchy8• 13 years ago

This may have been a case of careless storage. It is easier to hide bitcoins from would-be thieves (DEA, in this case) than it would be to hide gold or cash.

jmspring2• 13 years ago

Would be thieves? Buying from SilkRoad usually means illicit drug sales (good or bad, it's not legal). So, it makes perfect sense for govt agencies cracking down on such activities to seize what ever assets were used in said exchange -- cash, credit card, bit coins...

kinghajj• 13 years ago

Brainwallets cannot be seized, though they can make it exceedingly difficult to spend them in practice.

w-ll• 13 years ago

they can make it exceedingly difficult to spend them in practice

Not really. You can use services that just broadcast transactions. Blockchain.info has a service to do this, I'm sure there are a few other that exists.

fredBuddemeyer• 13 years ago

its a very bad thing that bitcoin is subject to government control. very quickly it will be used to tax and arm in order to .. tax and arm and its potential to break that loop will be lost.

sliverstorm5• 13 years ago

How the hell does DEA seizure of bitcoins = government control of bitcoin?

bdcravens2• 13 years ago

Someone buys drugs and gets caught, and has property seized. How audacious.

gwern3• 13 years ago

If anyone is curious, the guy seems to be the SR vendor 'Casey Jones' http://www.reddit.com/r/SilkRoad/comments/1gxiv7/srrelated_b...

chmike• 13 years ago

I have the impression that the possibility to track bitcoins history make it less anonymous than real money. There is a thin invisible string linking all bitcoin holders together and that can be followed. With honeypots, and help of NSA like methods it is possible to identify the people involved. As soon as bitcoins are used to buy goods to be delivered.

greenlakejake• 13 years ago

Yellow letters on an orange background? Yuck.

Bitcoins Seized by DEA

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