The United States this week announced that it seized $1 billion worth of Bitcoin stolen by an individual from the Silk Road marketplace over half a decade ago.
The Bitcoin was seized on November 3 and two days later the U.S. filed a civil complaint to forfeit the funds, representing the largest seizure of cryptocurrency the Department of Justice has ever made.
Shut down in 2013, Silk Road was the largest black market bazaar for illicit goods and services. It served thousands of vendors and more than 100,000 buyers, and was also used to launder the funds derived from their transactions.
According to the civil complaint filed this week, the marketplace had roughly 13,000 listings for controlled substances at the time of takedown, and 159 listings for illegal services, including computer hacking.
Sales revenues on the portal are estimated at more than 9.5 million Bitcoins, while the commissions from these sales are believed to have been in excess of 600,000 Bitcoins.
The complaint also states that the marketplace was used to process Bitcoin transactions in such a manner that would hinder attempts to track them through the cryptocurrency blockchain.
Following his 2015 conviction on seven criminal counts, Silk Road creator Ross Ulbricht was given two life sentences. A Silk Road admin was sentenced to three years in prison last year.
Earlier this year, agents of the IRS CI were able to identify 54 previously undetected Bitcoin transactions associated with Silk Road, representing Bitcoin that was allegedly stolen from Silk Road in or about 2012 and 2013.
Approximately 69,471 Bitcoins (roughly $14 million at the time) were sent from multiple wallets to a single address, namely 1HQ3Go3ggs8pFnXuHVHRytPCq5fGG8Hbhx (1HQ3). While 101 Bitcoins were sent from the wallet, the remaining 69,370 Bitcoins remained there. As of November 4, the estimated value of the cryptocurrency is of more than $1 billion.
Following several hard-forks that Bitcoin went through, similar amounts of Bitcoin Cash, Bitcoin Gold, and Bitcoin SV were found in 1HQ3.
The funds, the complaint reveals, were stolen from Silk Road by an unnamed hacker, who did not spend the money, but didn’t return it either, despite being threatened by Ulbricht, who became aware of his identity. On November 3, the hacker, referred to by authorities as “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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