Just by sitting on them, the government earned another $24 million from Silk Road’s bitcoins

January 22, 2014

The FBI shuttered Silk Road, an online black market known for being an "anonymous" place to buy and sell drugs online, last fall.  Since the crypto-currency Bitcoin was the method of payment used by the site, the bust left the FBI in possession of the largest single Bitcoin wallet in existence.

Last week the Justice Department announced the official forfeiture of 29,655 bitcoins seized in the investigation of alleged Silk Road kingpin Ross William Ulbricht. As of their forfeiture, DOJ calculated that the bitcoins were worth about $28 million. When Ulbricht was arrested in October, the haul was reportedly worth about $3.6 million. That's a $24.4 million potential profit made for the government just by sitting tight while the case moved forward.

That's due to the skyrocketing price of bitcoins over the past several months -- as you can see in this chart of prices on popular exchange Mt. Gox since when Ulbricht was arrested last fall:


(Bitcoincharts.com)

So the U.S. government now has a bunch of bitcoins. But it's still unclear exactly how it will dispose of them.  A spokesperson for the U.S Attorney's Office prosecuting the case told Kashmir Hill of Forbes that the government had "not yet determined exactly how the bitcoins will be converted and liquidated," but that it would be auctioning them off soon.

The government also has its eye on an even bigger prize: An additional 144,336 bitcoins, worth more than $130 million, that were found on computer hardware belonging to the alleged Silk Road creator. Ulbricht is fighting the civil forfeiture of that trove.

Andrea Peterson covers technology policy for The Washington Post, with an emphasis on cybersecurity, consumer privacy, transparency, surveillance and open government.
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