Earlier this week, crypto-currency watchers noticed that there had been movement of about 70,000 Bitcoin from an account that had been dormant for many years. That mystery has now been solved. The U.S. Department of Justice announced on November 5, 2020 that it had seized the account. At the time of the seizure, the Bitcoin were worth more than $1 billion.
According to the allegations of the civil forfeiture complaint, from 2011 until October 2013 when it was seized by law enforcement, Silk Road was the most sophisticated and extensive criminal marketplace on the Internet. The complaint alleges that, while in operation, Silk Road was used by thousands of drug dealers and other unlawful vendors to distribute hundreds of kilograms of illegal drugs as well as other unlawful goods and services to well over 100,000 buyers, and to launder hundreds of millions of dollars derived from these unlawful transactions. At the time it was taken down in 2013, Silk Road had nearly 13,000 listings for controlled substances and many more listings offering illegal services, such as computer hacking and murder for hire, which generated sales revenue totaling over 9.5 million Bitcoin and commissions from these sales totaling over 600,000 Bitcoin. The complaint further alleges that Silk Road used a so-called “tumbler” to process Bitcoin transactions in a manner designed to frustrate the tracking of individual transactions through the cryptocurrency blockchain.
Prosecutors say an unnamed hacker stole a part of this trove from Silk Road and moved it to a wallet. In 2020, agents of the Internal Revenue Service Criminal Investigation unit used a third party Bitcoin attribution company to analyze Bitcoin transactions executed by Silk Road and were able to trace the trove to “individual X.” Pursuant to that investigation, law enforcement seized about 70,000 thousand Bitcoin on November 3, 2020.
The complaint brought by the DOJ alleges that the property is subject to forfeiture but the government will have to prove that by a preponderance of the evidence standard. If it prevails, the court will order all interests of any potential claimant forfeited.