US Collects $48m on 114,336 Bitcoins from Ross Ulbricht

The Silk Road case proved controversial for hundreds of reasons. As many know, the United States Justice Department auctioned off Silk Road Bitcoins in 2014 and 2015. Ross Ulbricht challenged the seizure of the market’s bitcoins. Now, according to the Acting US Attorney for Manhattan, Ulbricht dropped the claims, allowing the United States government to collect the proceeds of the bitcoin auctions.

On September 30, 2013, the United States began civil action against Ulbricht, “DPR,” “Dread Pirate Roberts,” and “Silk Road.” The action pushed for the forfeiture of the Silk Road Bitcoins that DPR had stored on servers associated with five different I.P. addresses. Later, in 2014, a United States district judge ordered the seizure of the cryptocurrency associated with those servers, along with any other traceable criminal earnings.

Ulbricht and the Government agreed on the auction in 2014. The Stipulation and Order
for Interlocutory Sale of Bitcoin cited “the volatile market for bitcoins” as the reason for the sale, noting that the bitcoins could potentially lose value during the forfeiture proceedings. The sale of any or all of Ulbricht’s “Computer Hardware Bitcoins,” along with any interest earned on the money, were to be under control of the United States Marshals Service in the Seized Assets Deposit Fund.

In total, the US sold 144,336 bitcoins and finally cashed out in late 2017 for just over $48 million.

A quick calculation revealed how well the Marshals timed the auctions. For the buyer, that is. The US picked one of the worst time periods to sell bitcoin. Between the seizure and the auction, the cryptocurrency had dropped from roughly $1,000 to $334. For the government, $48 million “seized” and stolen from Silk Road servers is better than taking nothing from Ulbricht. Aside from his life in prison.

If the auction had taken place in late 2017—at the time of this article, for example, when bitcoin hit $4,400—the Department of Justice could have earned $630 million.

Ulbricht initially challenged the forfeiture of his funds after discovering that corrupt DEA and Secret Service agents had stolen hundreds of thousands of dollars in bitcoin from DPR. They had operated far outside their official capacities, extorting Ulbricht and ultimately tainted parts of the investigation. The DEA agent pleaded guilty to money laundering, extortion, and and obstruction of justice. The Secret Service agent caught money laundering and obstruction of justice charges.

The Acting US Attorney did not reveal the government entity that would receive the money.

proceeds. Presumably not the DEA or Secret Service.