FBI, Silk Road and the worst deal in bitcoin history?

Silk Road

"Silk Road" (the name derives from the trade routes started during the Han dynasty in 206 BC - 220 AD between Europe, India, China and many other countries) operated in the tor network. For the purchases of illegal goods and services users paid via bitcoins. It was to provide them with anonymity. At the beginning, the site had a limited number of new merchant accounts that had to be purchased at the auction. Over time, a fixed fee was introduced for each new merchant account. Buyers could use Silk Road free of charge. The owner of the "narcotic Amazon" (In March 2013, there were 10,000 products on the site, of which 70% were drugs.) known under the pseudonym "Dread Pirate Roberts" charged 7% of each transaction. In October 2013, the Federal Bureau of Investigation (FBI) closed the website and arrested the founder of Silk Road - Ross Wilhelm Ulbricht, who was charged with money laundering, drug trafficking, computer hacking, and even six murder assignments. On November 6, 2013, Silk Road 2.0 was launched (by former Silk Road administrators), which was also closed, and its alleged creator - Blake Benthall "Defcon" was arrested exactly one year later on November 6, 2014 as part of "Operation Onymous". Ultimately, Ulbricht was convicted (based on evidence, including detailed records on the server and chat, which he identified with "Dread Pirate Roberts" who built and controlled Silk Road) for life sentence without the possibility of parole.

Bitcoins from Silk Road.

The FBI initially took over 26,000 bitcoins from accounts on Silk Road (the value of which was then around 3.6 million dollars). Interestingly, the FBI teller said that "the agency will keep bitcoins until the Ulbricht process ends, and they will be liquidated." In October 2013, the FBI issued a statement that 144,000 BTC (worth $ 29 million), found on the Silk Road owner's laptop, was also secured. This meant that the Federal Bureau of Investigation had more than 1% of all bitcoins in circulation.

"Liquidated bitcoins".

The bitcoins seized by the FBI were not destroyed. It was decided to sell them at auctions in 2014 and 2015. Interestingly, on June 27, 2014, Tim Draper bought about 30,000 BTC from the US Marshals Service. The transaction amounts have not been provided.

"FBI wallet":

address: 1FfmbHfnpaZjKFvyi1okTjJJusN455paPH

Are these all bitcoins from Silk Road?

According to the FBI, from February 5, 2011 to July 23, 2013, approximately 1,230,000 transactions with a value of approximately 9,500,000 BTC were carried out. The sales commissions should therefore amount to approximately 665,000 BTC. Where are the other bitcoins found?

At the end of March 2015, a criminal complaint from the US District Court for the Northern District of California led to the arrest of two former federal agents who worked undercover in the investigation of Silk Road - Carl Mark Force of DEA and Shauna Bridges of the Secret Service. It is suspected that they have taken financial benefits in exchange for information about the investigation. They were accused of fraud and money laundering. Shaun Bridges pleaded guilty to transferring over 1600 bitcoins seized by federal authorities to his account (and then to the cryptocurrency exchanges). Carl Force has done the same thing. After being arrested Ulbricht he sent bitcoins from Silk Road to his own wallet, and then tried to "launder money" through cryptocurrency exchange. When they froze Force's account, he tried to use his DEA agent status to force them to unlock his funds and allow them to withdraw money. Interestingly, during the defense process Ulbricht said that Force and Bridges have access to the Silk Road administrator password, they can manage accounts, access private bitcoin keys or bank accounts. So where are the Bitcoins not confiscated by the FBI? On other wallets, "Dread Pirate Roberts" or maybe on the addresses of former, dishonest DEA and Secret Service agents? We will never know the truth ...

Worst deal in bitcoin history?

The US Department of Justice said it sold about 144,000 bitcoins for around $ 48 million, an average of $ 334 per unit. They chose a very unfortunate time - during this period the BTC exchange rate was falling.

What if they were holding bitcoins and sold them today? Instead of 48 000 000 $, they would receive almost $ 2 000 000 000 $!

• Years 2014-2015 144,000 BTCs = $ 48,000,000
• Today 144,000 BTCs = $ 1,993,204,869
• Difference = $ 1,944,994,975

At the opposite pole were the Winklevoss brothers, who in July 2013 announced they had about 1% of all bitcoins (of 12,000,000 BTCs that were in circulation at the time). For 120,000 BTCs then worth around $ 11,000,000 they can get $ 1,654,920,000 today.

Images from: https://www.pexels.com, https://www.fbi.gov, https://coinmarketcap.com

Have a nice day!

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