Pierluigi Paganini
November 06, 2020
On November 3, The United States this week announced that it has seized $1 billion worth of Bitcoin stolen by an individual from the Silk Road marketplace over half a decade ago.
“The United States filed a civil complaint today to forfeit thousands of Bitcoins, valued at over $1 billion dollars, seized by law enforcement on November 3, 2020, announced United States Attorney David L. Anderson of the Northern District of California and Special Agent in Charge of the Washington DC Field Office, Internal Revenue Service Criminal Investigation (IRS-CI) Kelly R. Jackson.” reads the press release published by the DoJ. “The seizure represents the largest seizure of cryptocurrency in the history of the Department of Justice.”
On November 5, the U.S. filed a civil complaint to forfeit the funds, this is the largest seizure of cryptocurrency funds the Department of Justice has ever made.
In October 2013, the FBI has shut down the popular black market Silk Road after many years of investigation, the website was hosted in the Tor Network and was seized by US law enforcement.
According to FBI, between February of 2011 and July 2013, Silk Road managed $1.2 billion worth of transactions for 957,079 users, the total earning for Ulbricht was nearly $80 million.
At the time, the FBI infiltrated the illegal website and identified Ross Ulbricht as the alleged owner of the illegal portal. FBI agents during the investigation made more hundreds of purchases on the drug marketplace.
The investigation was conducted with the support of several government agencies, including the Department of Homeland Security and the US Border Patrol.
The founder, also known as ‘Dread Pirate Roberts’, was arrested in San Francisco in 2013, he was reportedly in possession of 26,000 bitcoins with an estimated market value of $3.6 million USD.
“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.” continues the DoJ. “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 Bitcoins and commissions from these sales totaling over 600,000 Bitcoins.”
Sales revenues on Silk Road are estimated at more than 9.5 million Bitcoins, this means that the overall commissions are more than 600,000 Bitcoins.
According to the complaint, in 2020 agents of the IRS CI identified 54 previously undetected Bitcoin transactions associated with Silk Road. The transations were related to funds that were allegedly stolen from Silk Road in or about 2012 and 2013.
Roughly 69,471 Bitcoins (approximatively $14 million at the time) were sent from multiple wallets to the walled with the address 1HQ3Go3ggs8pFnXuHVHRytPCq5fGG8Hbhx (1HQ3).
“On approximately April 9, 2013, the Bitcoin addresses that received the 70,411.46 Bitcoin from Silk Road sent 69,471.082201 (approximately $14 million at the time of transfer) to
1HQ3Go3ggs8pFnXuHVHRytPCq5fGG8Hbhx (hereafter “1HQ3”).” reads the complaint.
“On approximately April 23, 2015, 1HQ3 sent 101 Bitcoin (approximately $23,700) to BTC-e, a company that provided Bitcoin related services and operated as an unlicensed cryptocurrency exchange. In January 2017, BTC-e and a Russian operator of BTC-e were indicted in the Northern District of California for operating an unlicensed money transmitting business and for money laundering through the exchange.”
As of November 4, the value of the cryptocurrency in the wallet is greater than $1 billion.
According to the complaint, the funds were stolen from Silk Road by an unnamed hacker that was also threatened by Ulbricht, who discovered his identity.
The identity of Individual X is known to the government that is aware of his
involvement in a transaction related to 1HQ3.
On November 3, the “Individual X,” handed custody of the Bitcoin address to U.S. law enforcement.
“Silk Road was the most notorious online criminal marketplace of its day. The successful prosecution of Silk Road’s founder in 2015 left open a billion-dollar question. Where did the money go? Today’s forfeiture complaint answers this open question at least in part. $1 billion of these criminal proceeds are now in the United States’ possession,” United States Attorney David L. Anderson of the Northern District of California commented.
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(SecurityAffairs – hacking, Silk Road)
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Cyber Crime / November 15, 2024
