The Feds Have $25 Million In Bitcoin From the Silk Road. Now What?
Friday, January 17, 2014 - 01:00 PM
Yesterday, the US District Attorney's Office for the Souther District of New York announced the forfeiture of 29,655 bitcoins from the servers it seized from Ross Ulbricht, the owner of defunct internet drug marketplace Silk Road. According to this bitcoin converter, that is about $24.5 million dollars worth of bitcoins. But since the US doesn't legally allow bitcoin exchanges, what can the feds do with it?
A spokesman for the DA's office told Forbes blogger Kashmir Hill that it will set up an auction soon for the bitcoins they have, treating them not as cash but as property, "as if they were Bernie Madoff’s penthouse or a drug dealer’s cars."
It's interesting to watch the government grapple with bitcoin and recognize it as something of value, even though it's not recognizing it as currency. The DA, in its statement, even gave a nod to bitcoin enthusiasts, saying "these bitcoins were forfeited not because they are bitcoins, but because they were, as the court found, the proceeds of crimes."
If this auction goes well, there could be a much larger bitcoin windfall for the feds down the line, as a separate cache of 144,000 bitcoins (almost $119 million) was also seized from Ulbricht, but he is currently contesting the forfeiture in civil court. And with bitcoin continuing to be used for illicit transactions online, there's a good chance we'll see forfeitures like this in the future. Though maybe not quite this big.