US seizes over $1 billion in bitcoin tied to Silk Road

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US seizes over $1 billion in bitcoin tied to Silk Road

Black market site was hacked.

The US Justice Department has seized over US$1 billion (A$1.37 billion) worth of bitcoin cryptocurrency which it says are the part-proceeds of sales of illicit goods and services at the now defunct underground online marketplace Silk Road.

US prosecutors said that when it was taken down in 2013, Silk Road had sales revenue totalling over 9.5 million BTC, with commission from the the sales at over 600,000 BTC.

To frustrate tracking of the flow cryptocurrency in the immutable blockchain distributed database used for bitcoin, Silk Road used "tumblers" that would perform a series of complex semi-random transactions to obscure payments.

The Justice Department is now seeking [pdf] the forfeiture of the cryptocurrency, which had been in the possession of an unnamed hacker whose identity is known to the US government, who hacked Silk Road and stole the bitcoin.

Silk Road founder Ross Ulbricht learnt the online identity of the hacker, and threatened the person in order to get the bitcoin returned.

However, the hacker kept the bitcoin but did not spend it.

In the past, the US government has auctioned off forfeited cryptocurrency.

Silk Road was seized by the government in 2013, with officials describing the underground website as a massive illegal drug and money laundering marketplace.

Ulbricht was convicted in 2015 of seven counts of enabling illegal drug sales via bitcoin. He was sentenced to life in prison, and lost an attempted appeal in 2017.

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