Bitcoin Forum

I didn't see this posted anywhere yet. If it is, feel free to remove.

It'll be interesting to find out how they got the private key. I would assume he had it encrypted in some form. If he didn't tell them, how would they have gotten it?


http://www.forbes.com/sites/andygreenberg/2013/10/25/fbi-says-its-seized-20-million-in-bitcoins-from-ross-ulbricht-alleged-owner-of-silk-road/

How did they obtain the password? A deal? Torture? These 144K Bitcoins will be sold eventually.  Thought it would have a bigger effect on the price? Or was that already expected?

https://blockchain.info/address/1FfmbHfnpaZjKFvyi1okTjJJusN455paPH

I think we'll see a lot less hostile actions to Bitcoin exchanges now, at least until the FBI has sold all their BTC :D

That's the million dollar question! As sloppy as he was, I highly doubt he stored it without good encryption!

Not so sure.  I'd say that there is some chance that they are effectively in complete control of the operational aspects of Mt. Gox, and it is very possible that they have every record that the organization had not deleted.  The main thing arguing against this hypothesis is that whoever is running it is doing their utmost to created a smoking crater where the mountain once stood.

The USG has a fairly compelling need to have an outlet for their new-found revenue stream (confiscated BTC of which where will likely be many to follow), and continuing operation of Mt. Gox would make sense just like when they confiscated the whore house in Nevada for tax reasons and continued it's operation.

OTOH, maybe the U.S. Govt would be smart enough to be long term speculators and/or unpredictable whales and not be in need an outlet.  I doubt it though.

Love the 324btc transfers. Props. ;D

Not the least bit surprising. (https://bitcointalk.org/index.php?topic=316811)

Yea, I said that one before too. 

I think this is bullish as those coins will be tied up for a while. 

He had to give the coins, maybe a deal was made...

Would be hilarious if they did and Mtgox froze them indefinitely. "Sorry, we need to see your power bill."

Way too early in the game for a deal! I don't even think he had his bail hearing in NY yet, did he?

His opsec was miserable.  They may very well have been sitting in an unencrypted wallet on his laptop/backup drive.  Or secured with a password of "DPR" or something.

DPR showed no signs of competence, to the point that if there weren't very compelling evidence that he is, in fact, DPR, I'd think he was someone set up to take the fall.

Mt.Gox Support, Apr 06 13:09 (JST):

Hello Alex,

Thank you for your inquiry. Our support staff is away and will be giving updates in 2 weeks.

Our apologies for the inconvenience caused. Please let us know if you require any further assistance.

Thanks,

MtGox.com Team

He probably wrote the password on a sticky note on his computer...

Or stored it in his gmail account...

You'd think it would be cold storage.  Makes one slightly wonder if this crypto is really as resistant to brute force as claimed.

He was sloppy. That is all. I am sloppy too, but then, I don't have 144,000 bitcoins. It seems they were all stored all over the place though, distributed amongst several addresses.

Only now is it being sent to one giant FBI controlled address.

If they had the altoid private key (the 111k BTC) they would be sending it to an FBI controlled address too. That's probably in cold storage.

When done properly, it is quite resistant to brute force.  Bitcoin crypto is crypto done incredibly well.

We'll know when his sentence is handed out.

I'd be willing to bet that these coins are the Silk Road members accounts, and the first seized coins was the escrow wallets. The wallet with the 111,000 coins is his personal wallet, and they will likely never get that one. There's just way too many wallets in this one to be his personal wallet, IMHO.

When's the last time the FBI made a $50M bust?

Exactly! And you barely here about it in the news! None of the alphabet soups even have anything listed anywhere on their websites! I think I might almost be ready to jump aboard the tinfoil hat ship at this point!

It's a fail on his part and now that amount could crash the price.

Actually, by having the coins locked up for who knows how long, it increases the exchange rate. When Bitcoin becomes mainstream, it shouldn't have that much of an effect when they're finally liquidated.

I bet the coins will be auctioned off. One day. This could be a month or a decade from now.

God DPR is a fucking moron. don't get me wrong I'm all for freedom, but bloody hell!

amateur mistake lead to his capture.

really amateur way of letting all his coins get captured.

why didn't he just hide 10,000 in a dozen random places. God I know if I had 20 million I'd hide it in at least 5 different spots.

I just hope that all the coins are sold off in one go.  plummet the price so I can clean up :)

I suspect selling this many coins on one of the markets would drop btc prices by about 50%. Hopefully, they will auction them all off to someone who will just sit on them. The other possibility (and not sure if this is good or bad - really depends on point of view) is that they will use the btc to infiltrate other TOR based drug markets.

What else was seized?

And the winning bid for this auction is to Mr. FBI for $12! Congratulations.

The fact that the transfer was made so long after his arrest probably means it took them some time to crack his wallet password. If that's true he probably used a pretty strong but not strong enough for the FBI password...

I wouldnt be suprised if the Cartels didn't put some muscle in getting those coins back. I think we have to think about how powerful the Sinaloa Cartel is. Chances are those coins get back to them. I feel bad for this guy I truly do. Could you imagine what could happen to someone or their family for that matter fucking over the Cartel? I hope this guy lives a happy life in WPP for the rest of his life. The alternatives are not good.



http://en.wikipedia.org/wiki/Sinaloa_Cartel

We don't know whether DPR's fortune is actually e.g. 300k hidden in 2 different wallets, and the FBI could have seized only one of them.

It is saddening to see that people's lives can be destroyed over something as trivial as money. I mean, in the static world of the past, money was something you needed to work for, and still getting wealthy took a long time and not everyone made it.

Hopefully everyone concerned will take heed to the most important thing: buy bitcoins yourself and after 2 years no need to work evermore. No more drug lords, no more FBI agents.

That was just his "FBI appeasement" wallet that he purposefully stored in his home and secured with a weak password.

The other 450,000 coins are still safe in his brain wallet.  But now they are plausibly deniable. 

For this to be true, wouldn't Forbes need to have not verified their sources/information (granted this does happen)?

If that's happened how did the court documents get onto the court servers?

This is copypasta from the other thread:

================================


I don't know if this is sufficient evidence but it's all I could do with Google. Here's the FBI website:

http://www.fbi.gov/newyork/

http://www.fbi.gov/newyork/press-releases/2013/manhattan-u.s.-attorney-announces-seizure-of-additional-28-million-worth-of-bitcoins-belonging-to-ross-william-ulbricht-alleged-owner-and-operator-of-silk-road-website


I know the two links are to the same source but the rest of the news articles and Wikipedia pages pointed to the same places so I figured it was a good start.

I can't confirm the story wasn't planted or that the website hasn't been hacked though so you'll have to take my word for it that I'm not involved.

It seems you believe one persuasion over the other. IMHO, you should be equally critical of both sides ;)

It shouldn't really matter how long the FBI was involved even if it was from day 1.

SR is an illegal operation so they went after them. Whether drugs should be illegal or not is a different matter.

Sell them in one go won't do them any good, everyone puts their wallets on watch and will be alerted when they come, besides, other than the prosecuted Mt.Gox, no exchange in the world has such fiat reserve to pay them.

I suspect they will just leave the stash there, and dip into it whenever they are short of money.

They're plenty well funded. $25M is less than a third of a percent of their annual budget.

More than likely it was one of the above.

I always thought DPR was an arrogant douche, he always talk like he's so smart and he can never be caught. He reveals so much information about himself, and thought nobody could connect the dots. Success breeds complacency and hubris, it always happens.

That leads to a reevaluation of Bitcoin security methods following a Search Warrant Scenario.

Most Bitcoin users operate totally within the law.  So any thoughts on this subject would be purely academic.  

Most conceivable Search Warrant Scenarios (for a wide range of offenses) would result in seizure of computers, digital storage media, and written documents from the specified residence.  In major cases, where it is suspected that the storage media is thoroughly encrypted when not in use, law enforcement personnel have demonstrated techniques of seizing computers "hot" after the encryption is unlocked and the device is in use by the user.

Which would then suggest counter techniques of storing encrypted information off-site and/or storing multiple private keys off-site, in either digital form or durable object "written" form.

Recent events illustrate the potential benefits of multiple accounts, rather than one large one.  Almost all arrested individuals are eligible for bail, and even those who are not are allowed visitors and communication with attorneys and relatives.  It does not require too much imagination to see how access could be given to one or more Bitcoin addresses for bail, attorney fees, prison barter goods, etc. without an unacceptable risk of losing the entire bankroll.  But if the funds are in one very large account, a very high degree of trust would be necessary before disclosing a private key.

Imagine how a person could obtain benefits from some or all of his Bitcoins after all his computer equipment and documents are seized and not returned.  It may be easier to imagine if you assume that the individual lives under a repressive regime.  You know.  One of those evil ones.

Knightmb operated totally within the law.  He was still raided by the Secret Service*, solely for the crime of owning a lot of Bitcoins and being publicly identifiable.

*FYI the Secret Service is a division of the US Treasury.

I think what you mean to say is most users intend to operate within the law.  The reality is that it is all dependent on interpretation.  For example the following can be seen as violations of various AML and KYC and other laws that most major countries subscribe to
http://blockchain.info/largest-recent-transactions

I could use some of those coins....

What's the story? PM OK.

http://www.reddit.com/r/Bitcoin/comments/12yfnk/cats_lead_feds_to_knightmb_worth_371kbtc_in/

So as a quick read, they suspected him of an unrelated crime and investigation created lots of grief to him and the family. Just enough hints that the real issue is that he is having too many bitcoins and/or being too vocal about them. Poor guy, but good to see that he is still active in the forum.

The same trick was played on me on 2008 (due to silver, which prior to bitcoin was the lynchpin of the monetary economy) and it actually worsened my mental condition a lot. The good side is that I made my fortune as a result because I got a LOT more credibility for my claim that the govt hates silver, and as a result you should buy some from me :)

This is the latest AFAIK: http://www.justice.gov/opa/pr/2013/June/13-crm-721.html

Is there any evidence that he is behind the prank?

Note: in my case there never was any, and the chief investigator admitted it in the beginning, yet they confiscated all my property for 7.5 months..

He might have struck a deal. Gave them access to the wallet in exchange for dropping the murder charges. In recent Forbes article there's no mention of him facing murder chargers anymore.

Sorry, I was talking about the off-topic of knightmb, and even my own experiences.

I doubt about dropping the murder charges if he really murdered someone. And if he does not, does the murder charge mean anything at all ?

A the cat's identification led to knightmb? Sounds more like parallel construction to me...

They probably already knew who they were going after but just needed some way of reaching him without letting everyone know they had intel on him from nefarious communication capture techniques.

I don't see anything that proves they actually have cracked any encryption. For all we know they just have a wallet.dat file with no key.

then why would they move the coins so long after the arrest? i'd say he used a moderately strong wallet password and they cracked it.

They couldn't move the coins without the key. And they obviously did move...Anyways here is the official FBI press release from Friday. Straight from their site:

http://www.fbi.gov/newyork/press-releases/2013/manhattan-u.s.-attorney-announces-seizure-of-additional-28-million-worth-of-bitcoins-belonging-to-ross-william-ulbricht-alleged-owner-and-operator-of-silk-road-website (http://www.fbi.gov/newyork/press-releases/2013/manhattan-u.s.-attorney-announces-seizure-of-additional-28-million-worth-of-bitcoins-belonging-to-ross-william-ulbricht-alleged-owner-and-operator-of-silk-road-website)

Well that's certainly a nice take for them.  What a profitable venture that was.

Yeah no kidding...170k BTC already in hand from the SR seizure? That's about 1.5% of all BTC in existence from just one court case. Imagine Seizing 1.5% of all USD in circulation lol.

It's more like seizing 1.5% of a very small country's currency.

Why not much effect?

When "bitcoin goes mainstream" 50M today may be 5B

why did they move them in 324btc chunks ?

Percentage on seizure was about 1% of total coins, and should have about the same relative effect to the price if they are abruptly liquidated, regardless what the exchange rate is, (as long as bitcoin's monetary stock is very much smaller than dollar's).

Exactly :)

if they liquidate them in a few years, millions more will have been mined by then

From the U.S. Attorney’s Office announcement:
https://www.fbi.gov/newyork/press-releases/2013/manhattan-u.s.-attorney-announces-seizure-of-additional-28-million-worth-of-bitcoins-belonging-to-ross-william-ulbricht-alleged-owner-and-operator-of-silk-road-website


Flash drives?

Probably. Obviously Ulbricht's security measures weren't very strong. By default I would think any wallets would at least be encrypted with a unique key...that's pretty much "protect your btc 101"

It took ~3 weeks to transfer the coins if they were confiscated on October 1st. Probably not enough to break any encryption even with a weaker password. Means they probably got the password from someplace else he used it. I wonder what else uses that key...

Where is the proof they moved coins? I haven't seen any. They just said they seized it, just like they said that they had seized his 600,000 BTC. They could just be talking about possessing a wallet.dat. They also could have asked Ulbricht for the key as part of working on a plea deal. If you have some info that demonstrates that they actually have full control over the 100,000+ BTC and have moved them to a different address then please show me, cause I haven't seen it. Maybe that info is there, I just haven't seen it. We know they have the 26,000 BTC on that other address.

The quote above says they recovered a wallet. So maybe it wasn't even encrypted. The point being that they didn't figure out that Ulbricht had an address and then cracked the encryption. Ulbricht may not have even really tried to protect these coins.

https://blockchain.info/address/1FfmbHfnpaZjKFvyi1okTjJJusN455paPH?offset=400&filter=0

Seems they know how to launder BTC  :D

Was Silk Road seriously that bloody profitable? Or should we also suspect some of this BTC is from the Bitfloor (24k), Slush (3k), Bitcoinica (43k), bitomat.pl (17k), et al., thefts?

lol "Are drugs really that profitable?!?"

Yup.


I doubt it.

http://www.reddit.com/r/SilkRoad/comments/1obvm2/estimating_dprs_income_after_expenses_exchange/

check this out:

this address  (https://blockchain.info/address/15U5NjgAbKqKyGKwayS648WwJoiCCvGnTG?offset=0&filter=0) has been making transactions with huge fees (some above 15 BTC). Look at the sent (reversed) taint (https://blockchain.info/taint/15U5NjgAbKqKyGKwayS648WwJoiCCvGnTG?reversed=true), 79 transactions ended up at FBI's address 1F1tAaz5x1HUXrCNLbtMDqcw6o5GNn4xqX.

Looks like FBI had difficulties with raw transactions and distributed some dirty drug money to miners :)

I could see maybe if the commission for selling on Silk Road was 50% or something ridiculous.

Maybe not difficulties, but just because some FBI bitcoin experts are also miners, so they intentionally increase the tx fees to siphon the dirty money. Hahaha

6.23%，but the total volume was something like 9.5 million BTCs.

Bitcoin could be utilized to run large business and make you super-rich, proven fact.

The US government loves to make press announcements, but never a public apology. I am still around, going strong!  ;D

I've actually had the Service Service to my home *twice* now on two unrelated occasions. I am still around, going strong!  ;D

Knight, I was under the impression you lost all the coins.

If you still have over 300,000 that makes you contender for top 3 spots of the Bitcoin wealth list.

I reckon Satoshi is higher than you!

So 4 months and 2 days after your indictment, your trial is already over with a not guilty verdict? Amazing to see that clause of the 6th Amendment work!
http://www.justice.gov/opa/pr/2013/June/13-crm-721.html

Last I think we all saw from you about the case was the copy-pasted blog post here: https://bitcointalk.org/index.php?topic=6825.msg2792613#msg2792613

Its amazing that we don't get any details as to how they got the Bitcoins... did they break encryption, etc.?

Pick your favorite:

• He gave them up.
• He had an easy password.
• His complex password was stored somewhere the FBI gained access too.
• He was key-logged.

Breaking the private key encryption is not listed for obvious reasons. (Even if the NSA was capable of breaking the key, they would not expose this ability to the FBI for a drugs case)

Possible answer: try and have a look at your phone and see which letters are on the 3-2-4 keys...

...got it? FBI guys you have a funny sense of humour!

Well done. ;)

Its very easy to send a large transaction with no fee. Have a look on the blockchain, the FBI redistributed nothing.

No fees paid on moving $28,000,000. That has to be a new motto for Bitcoin!

This whole affair is no doubt resulting in at least a few people at the FBI who are realizing how downright cool bitcoin is from a technological standpoint, at least.

That is pretty amazing.

Not sure, I think the timestamps are based on received time by the node, so I imagine if the FBI sent out 324 btc every couple of seconds, as they hit one node they might propagate closer together or further apart as they travel through the network to a mined block. And the time being recorded is the moment blockchain.info picked up the transaction (before being included in a block)

So I think its all a bit random about the times, I doubt the timestamps are indicative of the exact moment the FBI sent the coins.

I could be wrong, but I don't think the timestamps show any evidence of mining. If anyone is mining it would be the NSA.

EDIT: I'm probably wrong about the timestamps. The FBI transactions match time for time on BlockChain.info and BlockExplorer.com, so maybe they were just really fast? You might be right Stan.

See my edit, I don't think the times are based on when the node received the transaction, but the time it was included in the block.

Also if you sent a shedload of massive transactions you will find they get included very quickly. The miners still accept large Bitcoin transactions with no fee very fast.

If your transactions are small then no fee means limbo :(

fbi confirmed