The US Department of Justice announced in 2020 that it had seized 69,370 bitcoins and other cryptocurrencies related to the dark web marketplace “Silk Road” and sought to confiscate these assets and deposit them into the US Treasury. After several years, the US Court of Appeals finally issued an order on Wednesday officially approving the seizure of these encrypted assets.
(Background:
IRS seizes £1.2 billion in cryptocurrencies this fiscal year, Silk Road auction “30,000 BTC” increased 70 times in 8 years)
(Supplemental Background:
Beginner’s Guide: What is Silk Road? Understand the Differences Between Clearnet, Deep Web, and Dark Web)
Silk Road, which was launched in 2011, was the first modern dark web marketplace and was filled with various illegal activities, including the sale of weapons, drugs, and passport information. It was known for conducting transactions using bitcoin. However, Silk Road was shut down by US law enforcement agencies in 2013. During its two years of operation, Silk Road had a total bitcoin transaction volume of up to 9.5 million coins.
In 2020, the US Department of Justice announced that it had seized 69,370 bitcoins and other cryptocurrencies from the hacker address of “Individual X,” who hacked into Silk Road and stole assets. At the time, these assets were worth over $1 billion. The US Department of Justice sought formal confiscation of these assets, which are now valued at over $3 billion. After years of litigation, the US Ninth Circuit Court of Appeals finally issued an order on Wednesday approving the initial ruling made in August of this year, formally confiscating the aforementioned 69,370 bitcoins and other cryptocurrencies related to the dark web Silk Road. The order listed Silk Road founder Ross Ulbricht as the defendant, with two claimants and the US government as plaintiffs.
The management of the aforementioned 69,370 bitcoins by the US government has received close attention from the market. It is believed that if the US government were to sell these bitcoins on a large scale, it could potentially impact the price of bitcoin.
In 2021, the US Department of Justice announced that it had seized approximately 50,676 bitcoins from another hacker, James Zhong, who stole assets from Silk Road. These assets have been sold since March. At the time, the US Department of Justice stated that the remaining bitcoins would be sold in batches within a year, representing the proceeds from the Silk Road case that the US authorities had reached a consensus on selling.
Further reading:
Is the US government about to sell a large amount of bitcoin? 8,200 BTC scattered across 101 addresses
Founder agrees to transfer assets to the US government
During Silk Road’s two-year operation, founder Ross Ulbricht amassed a fortune of $1.2 billion. However, he was arrested in October 2013 and was sentenced to life imprisonment without parole in 2015. He was also ordered to pay $183 million in restitution.
In 2021, Ross Ulbricht reached an agreement with prosecutors, surrendering any rights to the 69,370 bitcoins and other cryptocurrencies seized by US authorities and agreeing to have these assets auctioned off to offset his $183 million debt to the US government.
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