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back to article Ross Ulbricht: 'Oi! Give me back my $34m in Silk Road Bitcoin booty'

After his arrest in October, 29-year-old Ross Ulbricht maintains that he is not the Dread Pirate Roberts, mastermind of the online drugs marketplace Silk Road. But he also says the Bitcoins the authorities seized from Silk Road belong to him, and the government should give them back. Since shutting down the secretive online shop …

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If Bitcoins are proved to be 'subject to seizure' under federal forfeiture laws, then isn't the government saying that they are legal currency? In other words would the fed be making a rod for their own backs?

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If you can seize property such as cars, boats and domain names then I can't see how.

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guberment

When it comes to liquidating the proceeds of ill gotten gains the Feds will sell anything they get their hands on even it it takes a yard sale to sell it. Its not usual in white collar crime cases for them to seize a large portion of the shares of company (happened at a company I worked for when the former CEO illegally wouldn't disclose the Mormon church elders who were fronting him money to buy a company and do some asset stripping). The Feds at least are usually smart enough to stagger the sales so as not to crash the stock price.

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Happy

No. A subject to forfeiture ruling would only mean the court recognizes Bitcoins can have a cash value, not that they are currency. Just like frequent flyer miles/credit card rewards, shipping club points, auto club attracton vouchers, stamp collections, baseball card collctions, equine/bovine/porcuine sperm and just about anything else you can think of. All of those things are subject to forfeiture, but good luck trying to buy your beer with baseball cards or pig sperm.

Something having cash value if sold does not make it currency.

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The fed isn't one entity

If the FBI seize your homeopathic treatments, that doesn't mean the FDA is bound to classify them as medines.

Same deal here, the treasury can view bitcoins as not currency whith the FBI siezes them.

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No. They are likely to say that they are investment notes, as indeed the SEC have already said in several cases. A court is unlikely to argue with the SEC regarding this matter.

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Re: recognizes Bitcoins can have a cash value

Not even that actually. The statue is written broadly enough that they can seize anything with which the government believes you can influence an enterprise.

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Re: guberment

Also this is a drug case. Laws regarding drugs are exceptionally draconian, and I say that as someone who generally supports keeping illegal drugs illegal. If:

- someone steals your Rolls Royce,

- you report it stolen to the local cops,

- the feds bust the perp during a drug buy

Initially the feds will seize the car as evidence, and will likely keep it under forfeiture laws. There are some very well funded police departments over here because of these laws.

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No. Just no.

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Pint

strange...

The strange thing here is the bitcoins are a string of numbers, and if I understand correctly they are worth nothing until converted to the destination currency. Is this right?

Some chatter on /. suggested that it was a defence strategy to get them entered as evidence for both sides...may be interesting ploy.

I guess they fact the Fed's had a pseudo-assassin entrapment gig going on, they'll have plenty of evidence, although it remains to be seen what the truth is. Unless he (RU) really was that dumb...

Anyway, I wonder if his (RU) defence lawyer accepts bitcoins....?

P.

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Re: strange...

The strange thing here is the bitcoins are a string of numbers, and if I understand correctly they are worth nothing until converted to the destination currency. Is this right?

Total nonsense! You could say the same thing of any commodity. The only thing "unique" about bitcoins is that they have zero inherent value, unlike gold which at least you can make jewelry out of, or a dollar bill which you can burn for fuel or put on the wall as artwork.

The interesting thing about bitcoin is that a bunch of people have decided that because some computers have spent a lot of time searching for chains of hashes with special attributes, that some bitstreams derived from those hashes have value. It's like saying that you can buy a new car with the 49th mersenne prime. OK, maybe a bad example because there's a prize for each new Mersenne Prime found, but having found the prime, you can't plunk it onto the counter at Best Buy and pick up a new TV.

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Re: strange...

@pet peeve

"The interesting thing about bitcoin is that a bunch of people have decided that because some computers have spent a lot of time searching for chains of hashes with special attributes, that some bitstreams derived from those hashes have value"

Look through the history of currencies and you will find that this is the very essence of many of them. If something has inherent value, ie is useful for something else it doesn't make a very good currency... It would be bad for the economy to tie up useful things or commodities rather than use them.

Since bitcoin can be used right now today to transfer money, buy things online (including things, often illegal, that can't be readily bought in other ways) and since it's quantity is limited, then it has real value. I'd certainly trust it more than the pound or dollar, as our governments seem to be converts to Mubabeconomics.

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Re: Re: strange...

@ Spoddyhalfwit

"Look through the history of currencies and you will find that this is the very essence of many of them. If something has inherent value, ie is useful for something else it doesn't make a very good currency... It would be bad for the economy to tie up useful things or commodities rather than use them."

Curious… Because I would have sworn that gold, silver, and copper/bronze all are "useful commodities" and have been used as money for some time, now. Hell, SALT -- a useful commodity, if ever there WAS one -- was once used as currency (vis: the Roman soldier's "salary"). In point of fact, most currencies have come from people agreeing on how much of useful commodity "x" they are willing to accept in swap for their labor/product.

Honestly, I would have to say that your argument "...ain't worth a wooden nickel."

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Re: strange...

whats gold useful for?

"People will always need gold ....."

NO THEY WONT!!!

people have never needed gold.

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Re: strange...

Gold is useful for manufacturing a number of electrical and electronic items. i.e. gold plated audio connectors, gold wire-bonding in silicon chips/devices, etc.

The fact that people also hoard them has caused these industries a huge surge in costs for no reasonable reason.

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Re: strange...

@Mike Moyle: he said "many of them", not "all of them", so a few exceptions don't refute his point. And although gold etc has been used in the past, more recent history shows that many currencies moved off the gold standards because it is problematic. (Although not because gold has intrinsic value, but because governments found themselves unable to regulate its supply. They really want inflation to run at 2%/year or so, which is easy to arrange by printing more money but hard to arrange by mining more gold.)

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Meh everyone knows...

DogCoin is where it's at !

To the moon !

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Anonymous Coward

Idiot

It takes a special kind of stupid to keep a single unencrypted copy of a wallet containing millions of dollars, while being involved in an enterprise that is likely to have your computers seized if you're ever discovered. If he'd actually encrypted his wallet and kept backups somewhere, he wouldn't need to be begging the court to give him his bitcoins back.

Utterly zero sympathy for the drooling retard.

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Re: Idiot

Is there an assumption or two there?

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Re: Idiot

Backups would be no use to him if (whilst he was incommunicado), the Feds "moved" the money to their own account - so his backup wallets would be as empty as his main one. The question of whether it was encrypted or not (or if encrypted whether the key was available elsewhere on the machine) is however a little more interesting.

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Re: Idiot

It's hard to keep your key secret when you've been arrested and have nearly limitless resources being applied to sending you to prison.

Without fail, everyone who has something locked, has their key/combination, whatever hidden somewhere.ost clever people lock up the intervening barriers too, but again, the way to gain access to those things is there. Somewhere. Only fools build 'safes' that can't be opened if something about their situation requires it.

It's really fucking stupid to lock up $30M worth of anything that you could never access again if you had a mild stroke, or were being held for ransom. Whatever the reason, only an Olympic class jackass would store thing of great value in a forever inaccessible way if something happened. If you're that stupid you do deserve to lose it.

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Re: Idiot

“It takes a special kind of stupid to keep a single unencrypted copy of a wallet containing millions of dollars, …”

Kinda asumming that was all he had, it is not unreasonable to think a larger stash is still hidden.

As in most blackmarket operations the “cash” lying around is what is needed or collected to do business, until it can safely hidden/moved; Not unlike cash registers in normal legal businesses. Except it was a multi-million dollar international business.

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I'm not involved in anything illegal, I just happen to have $30m of Bitcoins that I didn't immediately cash out and live the happy life of a multi-millionaire on.

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@ DavCrav

LOL. Yeah ain't that the truth.

And yet, while we both know that, I don't think it's a legally admissible argument. Even if it is, in all honesty if I were sitting on a jury and that was your primary argument, I'd vote "not guilty" while pining for the "not proven" option. And I'm the sort of guy who'd prefer these types were strung up on trees as quickly as possible.

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SVV

It's not real therefore you can't take it from me

Welcome to the argument that will enter the history books as the moment that the stupidity of bitcoin users reached its' zenith. So, it's not a real asset then, Mr bigtime drug dealer? Well, as it doesn't really exist you won't mind if you lose it then.......... as nothing minus nothing equals nothing.

Honestly, going up against the US legal system and saying "waaaah, you're not allowed to take my money off me because it's not really money even though I can buy stuff with it" is the most pathetic defence imaginable, but the faith of the true believers is still rather impregnable at the moment and this should set a nice little legal precedent concerning the true legal status of this dodgy pyramid scheme.

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Re: It's not real therefore you can't take it from me

^ Except it doesn't appear he is actually claiming that.

Perhaps Ulbricht is totally stupid but it seems more likely he has a smart lawyer who sees good legal grounds for getting the asset back. If it's not in the 'list of things the feds can seize' then they can't legally seize it. It seems eminently sensible, and the obvious course, for Ulbricht and his lawyers to argue that this asset is not covered by such a list.

I suspect he's on a hiding to nowhere but that doesn't mean he's wrong or foolish to try. The feds have over-stepped their powers in the past and may have done so here.

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Anonymous Coward

Oh dear

The chap's in a bit of trouble...

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“It takes a special kind of stupid to keep a single unencrypted copy of a wallet containing millions of dollars, …”

Kinda asumming that was all he had, it is not unreasonable to think a larger stash is still hidden.

As in most large blackmarket operations the “cash” lying around is what is needed or collected to do business, until it can safely hidden/moved; Not unlike cash registers in normal legal businesses. Except it was a multi-million dollar international business.

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The biggest seizure of Bitcoin in US history

Are you sure?

I seem to recall a previous seizure during the American Civil War, which was much worse than this one.

There was also Bitcoin Tea Party, before US independence, when all the Bitcoin aboard a ship got thrown into the sea in Boston.

Or have I mixed up my history a bit?

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Re: The biggest seizure of Bitcoin in US history

Anomalous Cowshed, you might have mixed up your history a bit.

The Boston Bitcoin Party was in 1773, before the First Continental Congress, so it’s properly part of UK history.

My guess is that the US Civil War episode which you’re thinking of is the 1864 raid on St. Albans (Vermont). Since that Bitcoin seizure was done by Confederate raiders, it is certainly arguable whether a wartime action of the CSA would qualify as a USA seizure. (Of course, one could mention Lincoln’s introduction of “greenbits” during the Civil War — his 19th century version of quantitative easing — as ultimately comprising a greater destruction of value, but that would be straying too far from your topic.)

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Go

Re: The biggest seizure of Bitcoin in US history

I thought they were throwing Tulip bulbs into liquor kegs during the Spanish American war?

Strange how time warps history.

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What ACTUALLY "remains to be seen".

"It remains to be seen whether those same well-wishers will be willing to put those funds towards Ulbricht's legal fees now that he has admitted to owning more than $30m worth of Bitcoin at the time of his arrest."

What actually remains to be seen is what the taxman thinks about Ulbricht having these Bitcoins which, even before the value recently ballooned, were worth a substantial sum. And if this is the first that the taxman is learning about it because Ulbricht hasn't reported it on his tax forms, then he going going to go away on tax evasion charges for a long, long time...

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Re: What ACTUALLY "remains to be seen".

"What actually remains to be seen is what the taxman thinks about Ulbricht having these Bitcoins which, even before the value recently ballooned, were worth a substantial sum"

Indeed, it was the taxman that really cooked Al Capone's goose.

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Asset forfeiture

If asset foreiture works the same in the US as it does in the UK (PoCA), now 'The Assumption' has been made that Ulbricht led a 'Criminal Lifestyle', anything and everything in Ulbricht's possesion is subject to seizure.

Even if they fail to convict him of a crime, under the forefiture laws the burden now rests on Ulbricht to prove with documentation how the items and funds were aquired by legal means with the appropriate taxes paid in full.

This could be interesting from a Bitcoin perspective, because you need to prove where they came from to avoid forfeiture. I suspect this will be at legal method of choice for dealing with Bitcoins.

Once a court has granted a forefiture order unless you can either strike out 'The Assumption' by proving you are not a criminal (being found innocent of the charges helps, but may not be enough) and that everything seized can be accounted for legally, then sorry it belongs to the state now.

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Re: If asset foreiture works the same in the US as it does in the UK

It doesn't. You Brits are bit more civilized about it than we are and will let the defendant keep more assets with less proof. So, yeah, his assets are pretty much toast, even if he beats the murder for hire rap.

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Re: Bitcoins don't count as the kind of property

No, no way, no how. Well, ok; if you manage to get it called in front of judge who is already on your payroll maybe. But even at that I'm not sure they risk losing their law license.

Google may not really be your friend, but if you search them you'll quickly find the relevant section of the RICO code under which the assets were seized:

(b) Property subject to criminal forfeiture under this section includes—

(1) real property, including things growing on, affixed to, and found in land; and

(2) tangible and intangible personal property, including rights, privileges, interests, claims, and securities.

- http://www.law.cornell.edu/uscode/text/18/1963

Since he's asserting it is his, it is necessarily either real property or intangible personal property.

Yes you can argue the law ought to be unconstitutional (an argument with which I have a great deal of sympathy), but so far it has been upheld when tested.

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Anonymous Coward

Encryption?

I think what a lot of you may be missing is that the wallet is still encrypted. I'm not an expert on Bitcoin wallets but for all practical purposes that makes it just a bunch of random numbers, not anything of value. I don't think the prosecutors can say: "Well, we assume there are Bitcoins in it so that's close enough." I also don't think they can force Ulbricht to decrypt it because he could be incriminating himself.

I think this could be an early play to gain leverage in a plea deal. If they can invalidate the money Ulbricht allegedly gained from his criminal dealings before trial starts, that's one less leg for the prosecution to stand on.

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Thumb Up

BITCOINS RETURNED? I HIGHLY DOUBT IT!!! Especially When 1BTC = $1000USD

BIT COINS TRADING AT 1BTC = $1000.00 USD

Based solely on the fact that BTC are trading in and around the $1000.00 per 1 BTC mark - GOOD LUCK!

This is a fight worth potentially BILLIONS of dollars. If it were something small or insignificant - then they would be fighting based on principal. This in the long run will buy the feds LOTS of nice "toys" and training facilities ETC ETC ETC.

He will NEVER see his $$$ again. Poor bastard. Should not have been so careless. He had a WICKED thing going for a while there.

Oh well - Someone will learn from his mistakes, capitalize on them - and ROCK ON!

Good on 'ya mates! Keep up the good work!!!

3 CHEERS FOR SILKROAD 2.0 !!!

And for all those who don't like it - Mind your own business! Spend your time and energy tea-toadlling some where else! No one cares that you disapprove of it!!!

You don't even have the SLIGHTEST clue about the BENEFITS of some of the items sold. i.e. - Did you know that the 1 and ONLY thing that has PROVEN to be successful at TOTALLY DESTROYING Post Traumatic Stress Disorder from Post War Trauma victims (For example Gulf War Vets that witnessed their best friend DISEMBOWELLED right in front of them by an I.E.D. from some towel head???) ONE DOSE of Pure MDMA can RESOLVE such mental issues!!! I personally was against illicit drug use until I found out about this. I suffered from something VERY similar. Used SILK ROAD, got the aforementioned substance - USED IT 2X and I have been CURED. No longer on ANY MEDS from OVER PRESCRIBING IGNORANT ALLOPATHIC DOCTORS!!!

So - AGAIN - Based soley on the fact that most of you have NO idea what you are talking about - MIND YOUR OWN BUSINESS!!!

TO EACH THEIR OWN!!!

CIAO CIAO!!!

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Anonymous Coward

Buddy, 'You trippin'

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