$1 Billion worth of Bitcoins seized by the US Government

Earlier this week, the bitcoin community was shocked when an anonymous person drained a digital wallet containing approximately $1 billion in bitcoin, believed to be proceeds from the now-shuttered dark web drug marketplace Silk Road. Now, those responsible for cleaning up the funds have exposed themselves: it was the US government.

On Thursday, the Department of Justice revealed that as part of a civil forfeiture case targeting the Silk Road, it had seized the wallet’s contents. With the support of an unnamed hacker, whose identity is known to the government but who is merely referred to in court records as “Individual X,” the government said it retrieved approximately 70,000 bitcoins.

‘Individual X’ allegedly hacked the payments system of the Silk Road sometime in 2012 or 2013. The government claims that Ross Ulbricht, the founder of the Silk Road, who is currently serving a double life sentence plus 40 years for his work on the site, “threatened Individual X for the return of the cryptocurrency,” but unknown hacker refused. Individual X agreed to forfeit the bitcoin to the United States government on November 3rd and helped transfer the money. It’s unclear if Individual X has been arrested or how their cooperation was attained.

The operation was praised by US Attorney David L. Anderson in a press release as a major achievement for the government. “The Silk Road was the most notorious criminal online marketplace of its day,” Anderson said. The successful prosecution of the founder of the Silk Road in 2015 left a billion-dollar question open. Where has the money gone? 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.”

The Department of Justice said Silk Road was “the most sophisticated and extensive criminal marketplace” on the internet functioning between 2011 and 2013 until it was taken offline by the FBI. The US government estimates that during this time, the website generated about 600,000 bitcoins in commissions. When Ulbricht was arrested and the website shut down in October 2013, about 175,000 of them were seized.

The Justice Department did not say what it wants to do with the $1 billion in newly seized bitcoins, but it has auctioned off similar hauls of cryptocurrency in the past. Such sales are processed like any other civil forfeiture, reports The Wall Street Journal, with profits kept by the agency and added to its budget.