Sign of the Department of Justice (DOJ) in Washington, DC
Sign of the Department of Justice (DOJ) in Washington, DC on September 10, 2016. Mark Van Scyoc/Shutterstock

On November 3, Whale Alert identified a transfer of almost 70,000 BTC (close to $1 billion) from a at-the-time unknown wallet to another unknown wallet. It has since become known that the wallet which held the BTC is linked to the now-defunct Silk Road exchange. The wallet which received the funds has also been identified. It is a wallet controlled by US law enforcement.

On November 5, the US filed a civil action to forfeit all of the cryptocurrency seized in the operation. Crypto analysis firm Chainalysis aided the US Department of Justice in this operation by helping IRS Criminal Investigation (IRS-CI) agents identify “54 previously undetected bitcoin transactions” connected to Silk Road. It was then found out that an individual, who is currently referred to by law enforcement as “Individual X”, managed to hack Silk Road and steal the funds of the matter.

In total, crypto assets currently worth a little over $1.1 billion were recovered in the operation:

  • 69,370.22491543 Bitcoin (BTC)
  • 69,370.10730857 Bitcoin Gold (BTG)
  • 69,370.10710518 Bitcoin SV (BSV)
  • 69,370.12818037 Bitcoin Cash (BCH)

US attorney David Anderson of the Northern District of Calidornia stated the following in the civil action announcemet:

“Silk Road was the most notorious online criminal marketplace of its day. The successful prosecution of Silk Road’s founder in 2015 left open a billion-dollar question. Where did the money go? Today’s forfeiture complaint answers this open question at least in part. $1 billion of these criminal proceeds are now in the United States’ possession.”

The civil forfeiture complaint lays out all known allegations against Silk Road, including the trade of illegal drugs, money laundering, computer hacking, and murder for hire. The complaint is filed as a standard procedure since the US is obliged to prove that the property they have seized is subject to forfeiture.

During its time, Silk Road was used by more than 100,000 buyers and thousands of unlawful vendors. At its peak, the darknet market generated more than 9.5 million BTC in sales revenue, with the commission from these sales totaling over 600,000 bitcoins. Silk Road was taken down in 2013. Its creator, Ross Ulbright, was convicted in 2015 and sentenced to two life imprisonment terms plus 40 years, with no chance of parole.

“Criminal proceeds should not remain in the hands of the thieves. Through CI’s expertise in following the money, we were able to track down the illicit funds,” said IRS-CI Special Agent in Charge Kelly R. Jackson. “The Washington DC Cyber Crimes Unit is uniquely specialized in tracing virtual currency transactions and we will continue to hone our skills to combat illegal activity.”

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