FBI Says It's Seized $28.5 Million in Bitcoins From Ross Ulbricht

Now the real question is -- where are they going to go from here?<p>* Few exchanges will be able to accommodate a 144.3K BTC transaction<p>* All transactions are public[1]<p>* The exchange(s) that broker this transaction will receive a massive amount of publicity<p>Now, it may end up being a bank looking to leverage the ownership of these BTC for their own business dealings, and it could adequately obfuscate where the BTC will go.<p>Keep in mind that the FBI&#x27;s BTC address has been permanently tainted -- any shady business that takes security seriously will <i>never</i> do business with that address. This disqualifies the usage of the BTC in sting operations (for example).<p>[1] History of &#x27;sends&#x27; for the FBI&#x27;s BTC address: <a href="https://blockchain.info/address/1FfmbHfnpaZjKFvyi1okTjJJusN455paPH?offset=0&amp;filter=1" rel="nofollow">https:&#x2F;&#x2F;blockchain.info&#x2F;address&#x2F;1FfmbHfnpaZjKFvyi1okTjJJusN4...</a>

&quot;Wait! Now it&#x27;s $50 million! Now it&#x27;s $23 million! Now it&#x27;s zero!&quot;

Link to the purported address: <a href="https://blockchain.info/address/1FfmbHfnpaZjKFvyi1okTjJJusN455paPH" rel="nofollow">https:&#x2F;&#x2F;blockchain.info&#x2F;address&#x2F;1FfmbHfnpaZjKFvyi1okTjJJusN4...</a><p>I&#x27;m not sure you can call it &quot;seized&quot; if the balance hasn&#x27;t moved to a different address, which would be proof that they have ownership. Until then they can claim they have found the money.

For the curious, this 114k seizure represents a full 1% of all bitcoins that currently exist worldwide (0.7% of all bitcoins that will ever be produced). I&#x27;d wager the US government won&#x27;t be releasing them or selling them back into circulation.

What I&#x27;d like to know is <i>how</i> they seized it. It requires they find his private key - either Ulbricht made serious blunders when storing his private key, or (paranoid) the FBI had some techniques to get it that we wouldn&#x27;t expect.

Really curious what FBI will do with the BTC they now have. Sell it for USD? Devise a government process for storing seized Bitcoin?

<p><pre><code> &quot;FBI Says It&#x27;s Seized $28.5 Million In Bitcoins From Ross Ulbricht, Alleged Owner Of Silk Road&quot; &quot;It believes that the stash belonged to Ross Ulbricht, the 29- year-old who allegedly created and managed the Silk Road...&quot; </code></pre> The title and that sentence are in contradiction with one another. They either seized it from him or they did not. If they did seize it from him, why are they saying that they &quot;think&quot; it is his.

<i>&quot;the FBI may have seized the key to that [111,000 BTC] wallet and thus gained control of the bitcoins, which they could transfer at any time to the FBI’s own wallet. “They may have the key and just be keeping them at that address,” says Meiklejohn. “That would explain what we wouldn’t have seen them move.&quot;</i><p>That would be extremely stupid for the FBI to do. If they don&#x27;t immediately transfer the coins, then anybody with a <i>backup</i> of this wallet (eg. an accomplice that has yet to be apprehended) could run away with the coins, even after the wallet has been &quot;seized&quot;.<p>So, unless the FBI is that stupid, it is almost certain that they have <i>not</i> seized this secondary wallet of 111,000 BTC.

As came out in the presses, <a href="http://upstart.bizjournals.com/money/loot/2013/10/08/fbi-cant-get-its-hands-on-dread.html" rel="nofollow">http:&#x2F;&#x2F;upstart.bizjournals.com&#x2F;money&#x2F;loot&#x2F;2013&#x2F;10&#x2F;08&#x2F;fbi-can...</a><p>The consensus I&#x27;ve read is that until announced otherwise, somebody made the announcement without realizing how seizures are supposed to work (It&#x27;s akin to me taking a copy of your bank statement and thinking I have wrested control of your bank account from you). This may be that announcement but it sure seems pretty limp evidence so far.

In order to &quot;seize&quot; ownership of bitcoins, the FBI would need to gain access to his private bitcoin keys. Wouldn&#x27;t it be possible to transfer all his bitcoin to a different address with a private key that&#x27;s encrypted? Wouldn&#x27;t such an action prevent a seizure?<p>EDIT: That&#x27;s what appears to have happened.

Supposedly the coins: <a href="https://blockchain.info/address/1FfmbHfnpaZjKFvyi1okTjJJusN455paPH" rel="nofollow">https:&#x2F;&#x2F;blockchain.info&#x2F;address&#x2F;1FfmbHfnpaZjKFvyi1okTjJJusN4...</a>

So now even the FBI is saying these crazy virtual coins have actual value? A great day for Bitcoin indeed!