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U.S. Feds Seized Nearly $1B in Bitcoin from Wallet Linked to Silk Road

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Re: U.S. Feds Seized Nearly $1B in Bitcoin from Wallet Linked to Silk Road

#11

Post by monokh »

prepend wrote: post #4
wmf wrote: post #2

Discussion from yesterday: https://news.ycombinator.com/item?id=24990233 (This is not a dupe since the Bloomberg story has new information.) Has anyone found any official information from the DOJ about this?

So the unknown wallet was actually the DoJ taking control? I was wondering what they wanted the courts to do. I’m not sure after reading the article. Are they just planning on destroying the wallet key, kind of like if they just burned a billion in seized cash? It’s interesting to think about how to do this. It must be hard to keep an agent from recording the key, and using it 50 years later or something. Theoretical…

In the past they have put it up for auction. [1]

You can send a transaction with a value and an output script of OP_RETURN (a bitcoin script instruction). These outputs are unspendable. [2]

[1] https://www.usmarshals.gov/assets/2020/febbitcoinauction/ [2] https://en.bitcoin.it/wiki/OP_RETURN

Re: U.S. Feds Seized Nearly $1B in Bitcoin from Wallet Linked to Silk Road

#12

Post by laurent92 »

prepend wrote: post #8
zadler wrote: post #6

Earlier quoted context omitted.

The simple way to do it is to send the btc to an address for which the private key is unknown, thereby making it impossible to spend. Watch them not do this.

How would you verify that the private key is unknown? I guess an auditable process in a black box to confirm the key is ever stored. But with $1B at stake, there’s some serious incentive to measure electrical output or something to snoop the key. I guess you could send to a random address, but there’s an infinitesimal chance that someone in the future generates a key with that address, right?

Same question: Ok we may not be able to brute-force it today for less than $1bn, but tomorrow, may a vulnerability in the algorithm make it possible to regenerate the private key?

Re: U.S. Feds Seized Nearly $1B in Bitcoin from Wallet Linked to Silk Road

#13

Post by Pick-A-Hill2019 »

wmf wrote: post #2

Discussion from yesterday: https://news.ycombinator.com/item?id=24990233 (This is not a dupe since the Bloomberg story has new information.) Has anyone found any official information from the DOJ about this?

Nothing so far on https://www.justice.gov/news but a bit of google-fu turned up this link https://www.courtlistener.com/recap/gov.uscourts.cand.368440...

(via https://www.courtlistener.com/docket/18607888/united-states-... )

Re: U.S. Feds Seized Nearly $1B in Bitcoin from Wallet Linked to Silk Road

#14

Post by monokh »

laurent92 wrote: post #12
prepend wrote: post #8

Earlier quoted context omitted.

How would you verify that the private key is unknown? I guess an auditable process in a black box to confirm the key is ever stored. But with $1B at stake, there’s some serious incentive to measure electrical output or something to snoop the key. I guess you could send to a random address, but there’s an infinitesimal chance that someone in the future generates a key with that address, right?

Same question: Ok we may not be able to brute-force it today for less than $1bn, but tomorrow, may a vulnerability in the algorithm make it possible to regenerate the private key?

If there is ever such a vulnerability in bitcoin that allows you to either

- Generate private keys at a rate in which you will be able to produce it in a reasonable time

or

- Outright reverse engineer the private key from the public key or other metadata

Then Bitcoin is broken and that 1bn is worth next to nothing.

Re: U.S. Feds Seized Nearly $1B in Bitcoin from Wallet Linked to Silk Road

#15

Post by Pick-A-Hill2019 »

prepend wrote: post #4
wmf wrote: post #2

Discussion from yesterday: https://news.ycombinator.com/item?id=24990233 (This is not a dupe since the Bloomberg story has new information.) Has anyone found any official information from the DOJ about this?

So the unknown wallet was actually the DoJ taking control? I was wondering what they wanted the courts to do. I’m not sure after reading the article. Are they just planning on destroying the wallet key, kind of like if they just burned a billion in seized cash? It’s interesting to think about how to do this. It must be hard to keep an agent from recording the key, and using it 50 years later or something. Theoretical…

From the link I dug out in the above comment

"According to an investigation conducted by the Criminal Investigation Division of the Internal Revenue Service and the U.S. Attorney’s Office for the Northern District of California, Individual X was the individual who moved the cryptocurrency from Silk Road. According to the investigation, Individual X was able to hack into Silk Road and gain unauthorized and illegal access to Silk Road and thereby steal the illicit cryptocurrency from Silk Road and move it into wallets that Individual X controlled. According to the investigation, Ulbricht became aware of Individual X’s online identity and threatened Individual X for return of the cryptocurrency to Ulbricht. Individual X did not return the cryptocurrency but kept it and did not spend it. On November 3, 2020, Individual X signed a Consent and Agreement to Forfeiture with the U.S. Attorney’s Office, Northern District of California. In that agreement, Individual X, consented to the forfeiture of the Defendant Property to the United States government. On November 3, 2020, the United States took custody of the Defendant Property from 1HQ3."

Re: U.S. Feds Seized Nearly $1B in Bitcoin from Wallet Linked to Silk Road

#16

Post by Aissen »

zaroth wrote: post #9

TFA says the suit seeks to seize the $1B in coins after an unknown hacker gained access to the funds. Forfeiture doesn’t mean destroying the coins. If the Fed can gain access to the coins they will auction them off. But if I understand correctly, this is the Fed basically laying a legal claim to and flagging coins that it doesn’t control therefore making them much more difficult to redeem, after seeing that they move…

The settlement would be an excellent idea. Big companies often make deals with governments over large amounts of tax they owe. If the hacker can walk with $50M clean and legal (and let the government have the rest), it's a pretty sweet deal.

Re: U.S. Feds Seized Nearly $1B in Bitcoin from Wallet Linked to Silk Road

#17

Post by Scoundreller »

Pick-A-Hill2019 wrote: post #15
prepend wrote: post #4

Earlier quoted context omitted.

So the unknown wallet was actually the DoJ taking control? I was wondering what they wanted the courts to do. I’m not sure after reading the article. Are they just planning on destroying the wallet key, kind of like if they just burned a billion in seized cash? It’s interesting to think about how to do this. It must be hard to keep an agent from recording the key, and using it 50 years later or something. Theoretical…

From the link I dug out in the above comment "According to an investigation conducted by the Criminal Investigation Division of the Internal Revenue Service and the U.S. Attorney’s Office for the Northern District of California, Individual X was the individual who moved the cryptocurrency from Silk Road. According to the investigation, Individual X was able to hack into Silk Road and gain unauthorized and illegal acc…

Sounds like they bought their way out of a prison sentence?

I wonder if any of the forfeiture got rebated back to them.

Re: U.S. Feds Seized Nearly $1B in Bitcoin from Wallet Linked to Silk Road

#19

Post by Scoundreller »

Drip33 wrote: post #10
prepend wrote: post #8

Earlier quoted context omitted.

How would you verify that the private key is unknown? I guess an auditable process in a black box to confirm the key is ever stored. But with $1B at stake, there’s some serious incentive to measure electrical output or something to snoop the key. I guess you could send to a random address, but there’s an infinitesimal chance that someone in the future generates a key with that address, right?

This address has no known private key https://www.blockchain.com/btc/address/1BitcoinEaterAddressD... Sure someone could randomly guess it but not likely. You don't need to have or know a private key to generate a valid checksum bitcoin address that can be sent to.

I just created several trillion “disposal” sounding addresses and started sharing the one that I guessed a private key for. There’ll be some real surprises in 2025!

Re: U.S. Feds Seized Nearly $1B in Bitcoin from Wallet Linked to Silk Road

#20

Post by gojomo »

Tuna-Fish wrote: post #7
prepend wrote: post #4

Earlier quoted context omitted.

So the unknown wallet was actually the DoJ taking control? I was wondering what they wanted the courts to do. I’m not sure after reading the article. Are they just planning on destroying the wallet key, kind of like if they just burned a billion in seized cash? It’s interesting to think about how to do this. It must be hard to keep an agent from recording the key, and using it 50 years later or something. Theoretical…

> Are they just planning on destroying the wallet key, kind of like if they just burned a billion in seized cash? Why on earth would they do that? Under US law, law enforcement agencies can keep a portion of the proceeds from the sale of any goods they legally seize. This is a massive windfall for them.

Oddly enough, in the case of other "Anonymity-Enhanced Cryptocurrencies" ("AECs"), the DoJ has taken the position that they'd rather not recirculate them. See https://twitter.com/jerrybrito/status/1314254265251225600>, where it's reported:

> In most cases, the Department [of Justice] does not liquidate seized or forfeited AECs, as doing so allows them to re-enter the stream of commerce for potential future criminal use.

So note: if the DoJ auctions these off, it's "good for Bitcoin", as it provides further confirmation they consider them a normal form of property whose legal uses outweight any illegal uses.

On the other hand, if they refuse to auction them off, it's also "good for Bitcoin", as it permanently reduces the circulating supply, making all other units incrementally more dear.

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