Bitcoins valued at more than $1 billion were traced back to a hacker who took them from the notorious criminal marketplace, Silk Road.
The Justice Department recently got its grips on thousands of bitcoins—worth roughly more than $1 billion—in a move that marks the largest seizure of cryptocurrency in the agency’s 150-year history.
The money traces back to Silk Road, the infamous, online black market that government authorities shutdown in 2013.
“Silk Road was the most notorious online criminal marketplace of its day,” United States Attorney David Anderson said in the department’s announcement of the seizure late last week.
At the underground shop’s prime, thousands of drug dealers and other vendors would tap in to conduct business. When Silk Road was seized almost a decade ago, it was “the most sophisticated and extensive criminal marketplace on the Internet, serving as a sprawling black market bazaar where unlawful goods and services, including illegal drugs of virtually all varieties, were bought and sold regularly by the site’s users,” according to the complaint filed Thursday. There were then nearly 13,000 listings for drugs, and more for services like hacking and murder-for-hire, which Justice said generated more than 9.5 million bitcoins in sales revenue, and commissions totaling more than 600,000 bitcoins.
That money was not immediately recovered at the time or when the creator behind Silk Road, Ross Ulbricht, was convicted for crimes a couple years later.
“The successful prosecution of Silk Road’s founder in 2015 left open a billion-dollar question. Where did the money go?” Anderson said. “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 funds were tracked down by Justice officials and agents in the Internal Revenue Service Criminal Investigation, or IRS-CI unit, which specializes in virtual currency tracing. The release notes officials in 2020 leaned on “a third party bitcoin attribution company to analyze bitcoin transactions executed by Silk Road.” They were then able to pinpoint 54 previously undetected bitcoin transactions executed by Silk Road, “all of which appear to represent bitcoin, which was the proceeds of unlawful activity, that was stolen from Silk Road in or about 2012 and 2013,” the department said.
Someone deemed “Individual X”—whose identity is not revealed, but is known to the government—hacked into Silk Road and transferred cryptocurrency from there, to wallets that were in the hacker’s control, the federal officials learned.
Law enforcement then seized more than $1 billion in bitcoins over two days last week.
“Criminal proceeds should not remain in the hands of the thieves,” IRS-CI Special Agent in Charge Kelly Jackson said.
The seized cryptocurrency will be subject to forfeiture proceedings before the U.S. can gain full control of it.