Silk Road shutdown: how can the FBI seize Bitcoins?

http://www.theguardian.com/technology/2013/oct/02/bitcoin-silk-road-how-to-seize

by flavmartins • 13 years ago

42 45 13 years ago

Aqueous4• 13 years ago

Another question: According to reports Silk Road and DPR made $80 million in commissions. Yet the FBI has only told us about seizing $3.6 million in BitCoins.

Where's the rest of the fortune?

jws• 13 years ago

Wine, women, and song?

sliverstorm3• 13 years ago

Supposedly DPR lived well within his means in modest accommodations.

swamp40• 13 years ago

Well, riddle me this:

Why is the Cayman Islands, with a population of 56,000, the 5th largest financial center in the world?

noonespecial• 13 years ago

That would be because they've managed to acquire somewhat of a reputation both for not handing over depositor's money to any and every government thug that waves some paper at them and for returning that money to said depositor on request. A tough reputation indeed to maintain on 21st century earth.

jonknee3• 13 years ago

Most likely they are using the current value of BTC against the cumulative proceeds which vastly overstates revenue unless all funds were kept in BTC.

anfedorov2• 13 years ago

The article refers to a "26k BTC fortune", which was confiscated, while the complaint against Ross said the total SR commissions were 614,305 BTC (https://en.wikipedia.org/wiki/Silk_Road_(marketplace)#Site_s...).

anfedorov2• 13 years ago

I'd wager Ross only kept enough coins accessible from the machine hosting SL for day-to-day operations, and sent the extra proceeds to an account the production machines didn't have access to, one with the private key either on his personal laptop or in a safety deposit box.

Aqueous4• 13 years ago

Maybe he buried his BitCoin wallet in the desert.

gesman• 13 years ago

FBI was hoping you'd never ask!

nyarlathotep• 13 years ago

It seems likely that the seized funds were taken from SR's escrow accounts. It matches up roughly with the amount of money said in the FBI complaint to be stored in escrow. I can only assume that they have no idea where his personal Bitcoin stash is, otherwise they would have hyped up seizing ~80mil.

sliverstorm3• 13 years ago

In the US, lawyers have argued that forcing someone to hand over their encryption keys violates the Fifth Amendment right to protection from self-incrimination.

Is the implication supposed to be that seizure of Bitcoins is protected by the Fifth Amendment? That seems far-fetched.

anologwintermut3• 13 years ago

Typically the 5th amendment argument applies to handing over passwords that are only in your head, not keys that are written down. The government can force you to turn over data you have.

The case for not turning over passwords for bitcoin wallets is probably stronger than for true crypt volumes.

If they arrest you with an encrypted volume on your laptop, they know its your's. The only question is what it is. In a lot of cases, the government knows what it is, they just need to be able to prove it. Courts call this a forgone conclusion and can compel you do use your decryption password( but not tell it to the cops).[0]

On the other hand, handing over bitcoin keys maybe the only way they can learn which bitcoins are yours. This is,arguably, not a forgone conclusion at all. And again, you are not just giving them access to the data, you are effectively being compelled to testify that it is your data.

[0]http://www.slate.com/articles/technology/future_tense/2012/0...

sliverstorm3• 13 years ago

handing over bitcoin keys maybe the only way they can learn which bitcoins are yours

Mmm, good point. Although considering bitcoin is a public network, they could have linked a certain address to you already, ala "follow the money"

sbl• 13 years ago

What happens if you have a bunch of illegally-acquired gold stored away in an unknown location, but the government has good reason to believe that you posses it? Are you forced to reveal the location of the gold? What are the repercussions of not handing over that information?

geofft• 13 years ago

I can see a consistent worldview where the government cannot ask you to decrypt something as part of an _investigation_, per the Fifth Amendment, but once you're convicted, can compel you to surrender something protected by an encryption key (as part of a proceeds-of-crime rule or something, or as part of seizing assets).

If the feds took an encrypted wallet file and are preventing the accused from accessing it, but haven't decrypted it, whether it's "seized" seems somewhat a matter of semantics.

(IANAL and I have no idea whether this meshes with the actual legal state of things in the US.)

jotm• 13 years ago

Can't they just gain access to the account and call it a day? No need to transfer the funds elsewhere, really...

ChrisClark• 13 years ago

And then the owner can just have someone else transfer them to a different address. Suddenly they aren't seized any more. ;)

A1kmm4• 13 years ago

It would be difficult to be sure that there is only one person with the key. If the defendant has a co-collaborator who also has access to the keys and is outside the reach of the seizing authority (or unknown to them), they could just transfer the Bitcoins to another new address and out of seizure.

The seizing authority in general has no way to tell in advance if such a co-collaborator exists, and assuming the transfer is to a new address with no historical transactions, it would be extremely difficult to identify who the collaborator was after the fact.

maaku• 13 years ago

What is this concept of a bitcoin "account" you speak of?

opminion• 13 years ago

"Seizing" is:

1. Taking control of them

2. Removing control of them from anyone else

The second point is specific to a digital asset which can be duplicated (in this case we are also talking about any passwords).

Bitcoin, by definition, allows the second point, but requires a transaction. So the FBI should have made a transaction immediately (or have the means of invalidating any transaction of those bitcoin).

This is novel and critical to the story, but the Guardian article seemed to tangentially miss it.

agildehaus• 13 years ago

How are they identifying the owners of these hidden services?

Are denial of service attacks the answer? DDOS a site and just ask popular hosting providers if they're experiencing any unusual traffic levels?

Seems like such an attack always precedes a takedown.

A1kmm4• 13 years ago

If they have a near global view of the network, they can do traffic correlation without having to 'ask' hosting providers - and putting a large signal through would certainly help that traffic correlation to occur.

It is possible that DDOS attacks are not actively initiated by the NSA, but that they greatly help them complete their traffic correlation analysis network to an acceptable level of certainty by lighting up the circuits from the rendezvous points to the hidden service.

kevinpet2• 13 years ago

That, or just look through old forum posts to see if the announcement of a bitcoin drug marketplace looking to hire php programmers was signed rossulbricht at gmail dot com.

nikcub• 13 years ago

Two things:

1. Ross posted online using his real email address, which was found with subpoenas

2. The Silk Road server had a public IP address used for server admin

panarky• 13 years ago

According to blockchain.info [0] and Arstechnica [1], the seized SR bitcoins may be in address 1F1tAaz5x1HUXrCNLbtMDqcw6o5GNn4xqX .

  [0] https://blockchain.info/address/1F1tAaz5x1HUXrCNLbtMDqcw6o5GNn4xqX 
  [1] http://arstechnica.com/tech-policy/2013/10/internet-lobs-insults-at-fbis-silk-road-bitcoin-wallet/

Silk Road shutdown: how can the FBI seize Bitcoins?

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