FBI struggles to seize 600,000 Bitcoins from alleged Silk Road founder

[Cebu_4_2]

Sorry, no signal so I may repeat to another thread.

http://www.theguardian.com/technology/2013/oct/07/fbi-bitcoin-silk-road-ross-ulbricht

FBI struggles to seize 600,000 Bitcoins from alleged Silk Road founder

The FBI has found that seizing an anonymous decentralised peer-to-peer currency was trickier than it seemed, following the Bureau’s bust of the international drugs marketplace, Silk Road (http://www.theguardian.com/technology/2013/oct/02/bitcoin-silk-road-how-to-seize).


When Ross Ulbricht, known as Dread Pirate Roberts to users of the site, was arrested last week, the FBI seized 26,000 Bitcoins belonging to Silk Road customers. But it also attempted, unsuccessfully, to claim the nearly 600,000 - thought to be worth around $80m - which Ulbricht himself is thought to be holding.


Bitcoin is a digital currency based on a methods of cryptography similar to those used to protect confidential emails. Due to its decentralised nature – the currency does not rely on any centralised agency to process payments, instead relying on work done by users’ computers – it is popular for a number of fringe-legal and illegal uses. One of those uses was Silk Road, where Bitcoin was required for all transactions.


In order to transfer Bitcoins out of a “wallet”, the name for the digital file which contains the encrypted information necessary to spend the currency, users need to know that wallet’s password or “private key”.


According to Forbes’ Kashmir Hill, that hurdle is causing the FBI difficulty. (http://www.forbes.com/sites/kashmirhill/2013/10/04/fbi-silk-road-bitcoin-seizure/)
“The FBI has not been able to get to (http://www.forbes.com/sites/kashmirhill/2013/10/04/fbi-silk-road-bitcoin-seizure/)Ulbricht’s personal Bitcoin yet,” wrote Hill. An FBI spokesperson said to Hill that the “$80m worth” that Ulbricht had “was held separately and is encrypted”. At current exchange rates, that represents slightly more than 5% of all bitcoins in circulation.


Even if the FBI is not able to transfer the money, now that Ulbricht is in captivity and most of his possessions have been seized, the funds are likely to stay where they are. A few high-security ways of storing bitcoins, such as a "brainwallet", a way of converting a bitcoin address into an easy-to-remember phrase, could still bypass their authority, but there is no indication at present that Ulbricht has used them.


• This article has been amended to clarify why Ulbricht's funds have apparently remained untouched.

[vacuum]

I hope he put a lot of thought into how he stored those coins.

On the one hand, if he has the private key written on a piece of paper hidden somewhere in his belongings, they will find it and take the btc. On the other hand, if he has it solely within his brain, that literally puts an $80 million bounty on his head. While he's in prison.

[BrewTech]

Why the hell would they care about bitcoins? They get paid in FRNs... the only true money.... right?









Right?

[Serpo]

I thought the FBI (For Bloody Israel) was only good at false flag type things

[Twisted Titan]

This is kabuki theather

If they wanted his bitcoins the FBI has a million ways to make you talk.

A nice waterboard and bright lite he will spill the beans in 5 mins.

[EE_]

Bitcoin, A Threat To The Feds…
By Bill Bonner • October 4th, 2013 • Related Articles • Filed Under


'Uh, did you sell those bitcoins, like I suggested?'

Your roguish economist has four sons. Several of them invested in the virtual currency Bitcoin. They thought it was the money of the future.

'Watch out,' cautioned their father. 'Governments always try to look into the future and prevent it from happening. And this is a future the feds are especially keen to stop. They have a monopoly on money. And there is no way they'll give it up without a fight.'

The fight has begun. The Financial Times is on the story: 'Blow to Bitcoin as $3.6 million seized.'

The feds began with a flank attack. They shut down the illegal drugs market website Silk Road, which they described as a 'black-market bazaar'.

They've also arrested a 29-year-old hacker who goes by the name of 'Dread Pirate Roberts'...allegedly the brain behind the Silk Road site.

A black market bazaar sounds like a good thing to us. Fewer zombies to worry about. Just crooks, scoundrels, and the usual riffraff.

But a 'black market bazaar' also sounds like the sort of thing the feds would like to stop. Who collects taxes in a black market?

Since the Silk Road site is where many Bitcoin enthusiasts turn their money into goods and services, its closing substantially reduces the value of the new currency.

We will come back to this subject in a moment. First...a quick market check.

Well, how do you like that?

Up, down, up, down... No visible trend. What to make of it?

Nothing... Let's go back to Silk Road and Bitcoin. And one of the biggest mistakes libertarians - and anyone opposed to state control - can make...

You are probably getting tired of us pointing out how the feds have failed. QE has not produced a recovery. Bailouts did not create strong companies. ZIRP doesn't lead to useful capital investment. Deficits don't boost employment.

But arguments over whether the feds' policies have succeeded or failed are nothing but wind unless you understand what the policies are really meant to achieve. Recovery? Full employment? Investment? The feds couldn't care less.

Take employment, for example. It would be stupidly easy to create jobs. A conversation yesterday explains why...

'Did you know that France had almost no unemployment in the 30 years after the war?' wife Elizabeth began.

'Then, after Mitterrand, unemployment rates were always high.'

'Hmmm...'

'Chirac, Sarkozy, Hollande - every president promises to create jobs. Apparently, they're not very successful. And small wonder. Mitterrand put in place so many laws to protect working people. Now, who wants to hire people in France? It's so expensive.'

'Hmmm...'

'You'd think they'd realise what's going on. I mean, there's an obvious connection between raising the cost and hassle of hiring someone and unemployment rates. If they really wanted to decrease unemployment they'd abolish some of this employment legislation.'

One of the silly conceits of libertarians and Tea Party activists is that the feds are stupid. Not so. They only look stupid. Because their policies are usually at cross-purposes with their stated goals.

The more legislation you pass to protect working people, for example, the worse off they become. You can see that easily in the US, where the typical real, spendable earnings for a man of working age are now lower than they were 50 years ago.

So, opponents say the feds 'failed'.

But they miss the point. All political activity is aimed at: (1) gaining power, (2) holding onto power and (3) using power to transfer wealth, status and more power to the insiders.

It doesn't matter whether you call it 'job creation' or 'foreign aid'. The real purpose is always the same - even when many of the insiders themselves don't realise it.

Bitcoin represents a threat to the feds' ability to rip people off by manipulating the value of the currency.

This 'exorbitant privilege', as de Gaulle called it, is worth trillions of dollars. It is essential to many other policies and pretensions - including managing interest rates, controlling the money supply, and controlling inflation.

(The feds' massaging of the CPI allows them to manipulate their costs - Social Security, debt service costs and so forth - as well as the value of money itself.)

Think they're going to give that up to a bunch of internet geeks? Not a chance!

Have the feds failed?

Nope...They have been the most successful group on the planet.

Regards,

Bill Bonner
for The Daily Reckoning Australia

http://www.dailyreckoning.com.au/bitcoin-a-threat-to-the-feds/2013/10/04/

[Twisted Titan]

*All political activity is aimed at: (1) gaining power, (2) holding onto power and (3) using power to transfer wealth, status and more power to the insiders.*


QFT

[Ares]

This is kabuki theather

If they wanted his bitcoins the FBI has a million ways to make you talk.

A nice waterboard and bright lite he will spill the beans in 5 mins.

Depends on how determined DRP is not to talk. I've read numbers cases of people being tortured during WWII, WWI, Vietnam, etc. and they absolutely did not speak.

DRP seems pretty confident in the cause, guess we'll find out what kind of a commitment he really has.

[madfranks]

With 5% of the money supply now potentially locked up forever, the value of BTC should go up.

[Son-of-Liberty]

This is what I have been saying about Bitcoin.

Even if they know you have them, even if they ransack your house and arrest you they still may not be able to confiscate your wealth.

[Libertytree]

This is what I have been saying about Bitcoin.

Even if they know you have them, even if they ransack your house and arrest you they still may not be able to confiscate your wealth.

What good is wealth without freedom? It might be a great big FU to your jailers but thats about it unless your family potentially has access to it.

[Ares]

What good is wealth without freedom? It might be a great big FU to your jailers but thats about it unless your family potentially has access to it.

After this incident, has got me thinking of ways on how I could have family, or trustee transfer my Bitcoins into a wallet only they control..

[Son-of-Liberty]

What good is wealth without freedom? It might be a great big FU to your jailers but thats about it unless your family potentially has access to it.

I don't know what precautions DPR took and if he had plans to transfer the Bitcoins if he was arrested but you could easily make a few extra copies of your wallet to give to friends and family. As long as you had a way to get the password to them or trusted them enough with the password to not steal it while you were free they would have access to the funds.

That's something you can't do with physical gold. You can't make phantom copies of it that can be morphed into the real thing.

If DPR was a regular drug dealer and got arrested and they grabbed his cash he is never getting it back. At least with BTC there is a chance.

[sirgonzo420]

After this incident, has got me thinking of ways on how I could have family, or trustee transfer my Bitcoins into a wallet only they control..

Set up a "dead man's switch" whereby if you do not do something, your bitcoins will be sent to specific addresses.

A little thought will reveal many options for managing one's coins.

Be careful with brain wallets though... if it is memorable to you, it may well be memorable to other people.

[vacuum]

Set up a "dead man's switch" whereby if you do not do something, your bitcoins will be sent to specific addresses.

A little thought will reveal many options for managing one's coins.

Be careful with brain wallets though... if it is memorable to you, it may well be memorable to other people.

And the other problem with brain wallets: http://xkcd.com/538/