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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

#41

Post by TuringNYC »

cmauniada wrote: post #36
TheHypnotist wrote: post #29

I'm not the most saavy BTC person, but isn't part of the allure of bitcoin the ability to evade this type of seizure?

Yes, but they didn't hack into the wallet. They basically found the person who was in-charge of the wallet and forced their hand (read: civil forfeiture) in order to gain access to the bitcoin.

the article says: "In the civil forfeiture complaint, Anderson explained that the government took control of the wallet on Monday, after an unnamed hacker agreed to forfeit the cryptocurrency."

It wasn't clear how the "agreement" was reached and what coersion was involved.

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

#42

Post by modeless »

londons_explore wrote: post #39

This gives the US government a lot of power over bitcoin... That both gives the government an incentive to let bitcoin thrive (to protect it's holdings), but also an opportunity to substantially manipulate bitcoins market price, possibly down to nearly zero. Or the keys to these bitcoin will sit idly in a filing cabinet forever...

They will auction it off as soon as possible like they did several times before.

I'm not sure why the bitcoin price has gone up in response to this news, because it means more supply is coming to the market soonish. These coins might have been presumed lost before. Certainly they would not have been able to be sold on any legitimate exchange. Now they will be washed clean and enter the markets.

On the other hand, a billion dollar bitcoin auction from the US government will generate some publicity, and publicity definitely drives the Bitcoin price up. We'll see which effect dominates.

There's another billion+ hoard of bitcoins which has the potential to be released to the markets in the next year or two, which is the MtGox reserves. Crazy story: MtGox went bankrupt after losing a bunch of bitcoins in hacks, but during the years-long bankruptcy proceedings the bitcoins they have left have been frozen, and their value has gone up so much that they could exit bankruptcy and pay all their debts many times over. But it's unclear what the bankruptcy court will ultimately allow them to do.

If the MtGox bitcoins are released to their many thousands of creditors (MtGox customers who had balances at the time of collapse), I expect a crash in the bitcoin price as many will choose to sell at the same time. This is different from the government bitcoin auctions, where there are only a few winners who probably don't plan to sell right away.

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

#43

Post by seibelj »

londons_explore wrote: post #39

This gives the US government a lot of power over bitcoin... That both gives the government an incentive to let bitcoin thrive (to protect it's holdings), but also an opportunity to substantially manipulate bitcoins market price, possibly down to nearly zero. Or the keys to these bitcoin will sit idly in a filing cabinet forever...

Despite loads of blockchain haters on HN, the government recognizes that bitcoin has value and has formal processes to seize, custody, and auction off the assets to add money to the federal treasury.

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

#45

Post by bufferoverflow »

TheHypnotist wrote: post #29

I'm not the most saavy BTC person, but isn't part of the allure of bitcoin the ability to evade this type of seizure?

With a bank they don't need your permission, they can just take your money straight from the bank.

With cryptocurrencies they have to threaten you. And if you're ok with spending some time in jail (for court contempt), there's nothing they can do.

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

#46

Post by GhostVII »

TheHypnotist wrote: post #29

I'm not the most saavy BTC person, but isn't part of the allure of bitcoin the ability to evade this type of seizure?

It's pretty impossible to beat the $5 wrench attack (or in the case of the government, 5 years in prison) unless you have anonymity, which Bitcoin does a very bad job of.

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

#49

Post by macksd »

ballenf wrote: post #37
TheHypnotist wrote: post #29

I'm not the most saavy BTC person, but isn't part of the allure of bitcoin the ability to evade this type of seizure?

The regular reply to that strength is usually the rubber hose threat. Which is pretty much what happened here it seems with the person who had control of the private key in custody of the government.

This is the XKCD you're looking for: https://xkcd.com/538/

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

#50

Post by colinmhayes »

cmauniada wrote: post #36
TheHypnotist wrote: post #29

I'm not the most saavy BTC person, but isn't part of the allure of bitcoin the ability to evade this type of seizure?

Yes, but they didn't hack into the wallet. They basically found the person who was in-charge of the wallet and forced their hand (read: civil forfeiture) in order to gain access to the bitcoin.

I'm not sure civil forfeiture is the right term for what happened here. I don't think the government can compel individual x to give them the wallet's key. Unless they found the key laying around I'd say they likely they built a case against them and used that to get them to trade the billion dollars in exchange for dropping the case.
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