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

Using the freenode/#bitcoin 'gribble' irc bot for some calculations, there are only 45,000 bitcoins or $5Million for sale over $100USD.

donpdonp> bids 100 gribble> There are currently 45669.225 bitcoins demanded at or over 100.0 USD, worth 5307618.93329 USD in total.

Selling the remaining 550,000-odd coins would wipe out the market and net only $6million more.

donpdonp> market sell 600000 gribble> A market order to sell 600000 bitcoins right now would net 11853320.3682 USD and would take the last price down to 0.0100 USD, resulting in an average price of 19.7555 USD/BTC.

The Grugq addresses this issue by recommending that one set up an entire fake persona before doing anything, and then doing all the activities "in character" as that persona. If you stay in character, then even making the types of mistakes DPR made would only lead the authorities to the persona rather than yourself.

Granted, this video didn't exist when DPR made Silk Road...

That is the difference between a professional and an amateur. An amateur tries hard to get things done, but doesn't really pay attention to methods or details. A professional knows that methods and details matter more than knowledge... and uses best practices to get things done.

If you're running the worlds largest illegal market place, the primary goal should be security and privacy. He re-used login names by accident, or maybe even just laziness.

A simple way of avoiding the above issue is to have a "personal" computer with personal accounts and activity, and a "work" computer, with work accounts and activity. Never use the work computer at home, and never use the home computer in the same place you use the work one. There's no way to confuse identities or traffic patterns.

I think Silk Road is proof of just how good Tor is. It can protect you from governments who are trying to find you. It can even protect someone who knows nothing about programming or security.

I guess you want to pick names that have lots of false positives when searching. But of course you can't ping google to check. Is there a known mechanism for this? I guess the old dice + newspaper to pick a phrase?

Maybe I'm too sensitive about this since nobody in the history of the known universe has the same name that my parents picked, so any hits in search engines are never about anyone else. Unique usernames function the same way.

There are plenty of countries that would scoff at extraditing him for this simple fact of not having a treaty. Even countries that we do have a treaty with would've locked up extradition in the courts for years because he's facing life imprisonment for making a website and a bunch of other garbage they found on his servers:

http://www.latimes.com/business/la-fi-ulbricht-hearing-20131...

If convicted, Ulbricht could be sentenced to life in prison.

They're also charging him with paying to have someone killed merely based on chat logs. They even said there's no evidence anyone was killed or frankly any evidence at all other than the chat logs.

Don't give me silly articles. I am an American who has lived in Croatia and I'm pretty familiar with how the average Croatian views the United States, and I am pretty confident in my experience that they would have no problem handing him over even without a formal treaty. There is literally no reason to not do it.

If USA wants you in Croatia or virtually any Balkan or third world country not slaved to China /Russia, you will be placed in a private FBI jet in no time.

My guess would be that if he had this type of btc, he'd begin to work on establishing reliable, trustworthy in-person communicants to perform his big transfers. Perhaps another reason why SF was an important place for him to be. It'd also be intelligent to bring some muscle along to the transfer.

>Not to mention some of those transactions can be traced back via the chainblock after-the-fact, creating more problems for you as now the FEDs know it's SR related.

Obviously, all bitcoins obtained from this type of activity should automatically go through a thorough, trustworthy mixer, perhaps even one that the btc owner wrote himself.

"You'd think" is often true when "you'd be correct to think" isn't.

One of my goals is to put myself in a situation to live comfortably on the North Shore of Oahu in the future, because that's where I want to be.

You mean "deflation"? ;)

The nice thing about BTCs (aside from anonymity) is that you can always subdivide to tiny increments.

If my illegal activity generates 1 bitcoin which, 2.5 years later is worth 10 bitcoins, all 10 bitcoins can be seized since they all originated from the original seizable piece of property.

Were this not the case and only the orignial result of an illegal transaction could be seized those running illegal operations would be able to profit from their crimes by simply converting one type of property into another that could increase in value. For example, if you sold 20,000,000 in drugs and purchased 20,000,000 in stock, it does not make sense that, once your property is seized, you can keep the increase in value between when you broke the law and when you got caught. This would make crime much more profitable which is the opposite goal of the seizure laws.

As mentioned in the article, even after acquiring the wallet file, the FBI is still unable to perform transactions with that BTC. There's no bank they can order to transfer it into their account, no briefcase full of cash they can deposit, etc. As I understand it, the only way they're able to deprive Ulbricht of them is by not letting him keep a copy of the file. With the "brain wallet" strategy (not sure how viable that really is), they wouldn't even have been able to get this far.

There are MANY examples of this, so yes. However, it usually applies to the wealthy, so they most probably have better legal representation.

Particularly given the potential capital sentence, I'm pretty sure he's lawyers -- expensive or not -- will recommend taking a plea if one is offered. Whether or not he'll take it is a different story.

A piece of paper: http://bitcoinpaperwallet.com/

You should only print it from a secure system though.

They would need to break the encryption first though.

- Deliberate invalidation: "sweeping" is the process of transferring all funds from a wallet into another one. If the owner ever gets access to some private computer time and one of his wallet backups, he can empty everything into a new address - one where the private key is stored in an undisclosed location, even his brain. Anyone with access to the wallet file in question in this article would do well to sweep it into a new address now.

- The reference client creates 100 addresses at a time and stores their keys in a file. New addresses are used by default for "change." Change is another subject entirely, but the end result is that yes, you do need to keep updating your backups every 100 transactions or so. This has the nice effect of helping anonymity and passively invalidating that file you forgot about, and the not-so-nice effect of being annoying. Some other clients have different behavior.

The other question is then whether the FBI would then liquidate the coins via an exchange, or just sit on them.

People think dollars have value because they're accepted by other people because other people think they have value.

You accept your paycheck in whatever currency you accept it in and believe it has value because you have faith that other people will accept that currency for whatever goods and services you want. It all works as long as everyone believes the currency will keep having value in the future. Bitcoins are no different. As long as a group of people believe they have value in the future, and will be accepted as payment for goods and services, they will continue to have value.

I do however agree that an actual amendment is unlikely.

I was looking at it from a more general PoV than simply DPR's fate: the practical need for the judicial power to be able to seize stuff is threatened by the 5th. There must be many people in the system who badly want to carve password rendition out of the 5th's no-self-incrimination protections.

Coming back to DPR's case, given the political importance of the case (it's about sovereign states' ability to police Internet on their own turf), I don't think the central problem is to recover the BTC600K as actual dollars. And I don't even know whether they could easily and legally sell them off, would they get the keys. The problem is as follows: if there are copies of those wallets, if they're spent from one of those copies, feds will look like fools powerless to confiscate millions of dollars from an imprisoned and convicted guy.

The journalist said "don't worry, feds have seized the wallets, they won't be spent". That's almost comically false, but that's telling as (conservative) wishful thinking: if only this was true, then no major social/legal adjustments would be necessary to cope with the emergence of crypto-currencies.

1) Your password is "ITotallyKilledThoseTwentyPeople", e.g. the password contains testimonial evidence. This can probably be circumvented by allowing the defendant to enter their password privately.

2) Your lawyer successfully argues that the very admission of knowing the password to a thing is testimonial. In other words, let's say the feds find an encrypted hard drive labelled "child pornography" under the couch at your apartment. If your argument is that a friend left it there, and the feds can't prove otherwise, then the very act of decrypting that drive would be an admission that it's yours, and hence a violation of the fifth.

It'll be interesting to see where law settles in this area. One thing that seems certain: if the gov't can prove you know a password, they can force you to use it (assuming use is possible without disclosure).

That much power will let them mess around with what transactions get accepted, but that's an entirely separate issue. 51% attack is child's play at this point. What do you do against an adversary that publishes 500 different block chains designed to be easily confused with the 'correct' chain?