US: $28 million bitcoins forfeiture is a record

Published on NewsOK Modified: January 16, 2014 at 6:38 pm •  Published: January 16, 2014
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NEW YORK (AP) — A record $28 million of bitcoins was formally transferred to the U.S. government several months after it was seized from the server of the black market website Silk Road after the government claimed the digital currency was used to facilitate money laundering, prosecutors announced Thursday.

The action came a day after a Manhattan judge approved the forfeiture of the bitcoins and the website, and three months after San Francisco entrepreneur Ross Ulbricht was arrested on charges he operated an online marketplace for illegal drugs, following a crackdown on the website. He has pleaded not guilty to charges of narcotics trafficking, computer hacking and money laundering.

In a news release, U.S. Attorney Preet Bharara said it was the largest forfeiture of bitcoins ever by the government. He called Silk Road "a global cyber business designed to broker criminal transactions." The website is believed to have collected more than $1 billion in revenue from more than 100,000 customers.

"These bitcoins were forfeited not because they are bitcoins, but because they were, as the court found, the proceeds of crimes," Bharara said.

The prosecutor said investigators also seized more than $130 million worth of bitcoins from computer hardware belonging to Ulbricht, though U.S. District Judge J. Paul Oetken has not yet ruled whether those bitcoins must be forfeited. Ulbricht, 29, has challenged the government's claims to that currency and its insistence that he operated online as Dread Pirate Roberts.