As long as he's believed to have control over those BTC, he can never be safe in prison and his family will be at risk of harm.  I'm sure the feds will point that out to him - repeatedly.

His wallet may be "uncrackable" from a technological standpoint, but that's not worth a damn unless he's willing for himself or his family to die in order to protect its contents.

It's not just the media.  People on the SR forums and reddit have been talking about DPR as if he was one of the biggest criminals in the US when in reality SR is dwarfed by the illegal drug market in particular and "organised crime" in general.  We're not talking about an enterprise which had the resources to control sectors of legitimate enterprise or to pay off whole police departments and the judiciary like the mob of the 1970s.

Someone in the UK was also raided while the DPR take down was happening (you can find the details on SR forums if you're interested).  No charges have been laid against him to date but the list of items SOCA seized runs to 18 pages.  According to him, the warrant SOCA had was issued on 16 September - meaning they intentionally delayed executing that warrant until the SR take down was in progress.  He also reports that while he was being interviewed, SOCA was being fed questions to ask him by phone (they asked him about "Ross Allbright", so he assumes US authorities were feeding the questions).

What's interest about the UK arrest is that it wasn't a vendor of illegal products.  It was someone who ran a head shop and supplied vendors with packaging materials - I guess the authorities were hoping that because the person was selling a legal product they might keep a list of their customers.

He recently reported that the cash seized by SOCA has already been returned to him but that the analysis of the "drugs" they seized will take a few months and that the forensic analysis of his computers will take at least 6-9 months (apparently they're back-logged).


If you're a big vendor or someone who was using SR to source drugs for distribution, then you'd have to be anxious - no matter how careful you might have been yourself, you can't know for certain that others with whom you dealt were equally cautious.  And you'd hope to hell that they don't catch up with whoever was laundering your SR income for you.

Anyone who buys into the narrative of federal agents being old guys in suits who couldn't possibly understand technology is an idiot - as is anyone who ever assumed that their communications on SR were ever "private" in any meaningful sense.

He can be connected back to the very beginning of Silk Road.  He can also be connected to its recent operations.  A lot of people - including the authorities at this point - believe the whole thing about the operation of SR having changed hands at some point is a crock of shit.

The protective order obligates them to hold them until the civil complaint has been determined.  In real terms, that means until it's been established - either by trial or by a plea - that any of the offences which allow confiscation of the assets (including the BTC) have been committed.

The spokesperson said that they would "probably" liquidate the seized BTC.  They could, of course, fake the sale and hold onto all of them for use in future law enforcement operations.

If they are sold, it will likely be by public auction and not some method which allows purchasers to remain anonymous.

Yep.  The 26,000 were the BTC in escrow.  The keys for those addresses had to be on the server because the payment process was automated.  While SR staff had access to the server, the feds had a protective order authorising them to sweep coins from the escrow accounts (and any other accounts identified as belonging to the defendants) into an address controlled by the authorities. 

It didn't matter whether someone else had a copy of  the wallet.dat because that "someone else" wasn't aware of any need to move the coins prior to the domain seizure notice going up - the same protective order which authorised them to seize the domain authorised the feds to move the coins.  It also authorises them to sweep any coins which continue going into the SR accounts (ie, coins from transactions pending) before shutting down the SR servers.  3, 4 and 5 are the relevant parts of the protective order.

http://www.nytimes.com/interactive/2013/10/03/nyregion/03silkroad-documents.html?_r=0

Oh it's even better than that.  One of his former employees was arrested in January and he didn't shut up shop.  That's the first person he tried to have killed.  Guess who took that "contract" and convinced him it had been carried out?


http://www.slate.com/blogs/crime/2013/10/02/ross_william_ulbricht_maryland_indictment_the_alleged_silk_road_mastermind.html

This simply isn't true.  Among other things, the US now requires foreign investments by US citizens to be reported to the IRS by the companies where they're held.  A lot of foreign financial service providers have decided that the cost of compliance isn't worth the hassle and that declining to have US customers is the best way of avoiding having to comply with what effectively amount to US laws with extra-territorial reach.

Because so many nations are FATF members and they agree to operate within the FATF framework, there are very real risks of sanctions by other members if they just ignore things related to financial crime (and tax evasion is a financial crime).  Once those sanctions are imposed, it becomes very difficult for individuals and businesses to transact with the outside world as their financial institutions get blacklisted.

Although that's true, those kinds of businesses are often regulated under other financial services laws which require AML/KYC compliance (even jewellers are now required to report large transactions in many FATF member countries).  The FinCEN guidance statement doesn't really limit the application of financial services regulations to Bitcoin enterprises.  A business may successfully argue that it isn't a money transmitter, only to find that it needs some other kind of financial services licence to operate (the examples you gave are regulated).

For what it's worth, there's more.


https://krebsonsecurity.com/tag/goldage/

I'm honestly surprised LR lasted as long as it did.

People need to remain mindful of the potential for their favourite alternative currencies getting shut down and limit their exposure accordingly.

With trusted status you can withdraw 10,000 BTC in a 24 hour period.

With verified status you can withdraw 1,000 BTC in a 24 hour period.

Transferring out Bitcoin and selling them OTC is probably your best way to avoid being caught by withdrawal limits of other services or creating reportable transactions.  There are people who buy large quantities of Bitcoin OTC.

Since when does the success of Bitcoin depend on being able to speculate on its value?  Bitcoin as a p2p payment system doesn't depend on that and neither should Bitcoin as a currency.  It's success shouldn't depend on being able to trade it like a commodity.

Movements of conventional currencies are already regulated and its those regulations which are affecting Bitcoin exchanges - they're not new regulations.  Exchanges know those regulations exist and know they'll be affected by them.  If they don't have the capacity to do that, then perhaps they shouldn't operate a financial service.

I don't think it's selfish (god knows there's a hell of a lot of Bitcoin businesses which won't survive without mentors) but I do believe that it's led more than one investor in the Bitcoin world to make toxic investments they might not have made on a purely financial basis.  It's a bit like the dotcom era in that everyone wants to discover the next wunderkind, there's a lot of nebulous enthusiasm floating around, and a lot - perhaps the majority - of apparently promising deals will go sour before this relatively new sector stabilises.

I doubt there's anyone associated with Bitcoinica who wouldn't make at least some different decisions given the chance.  Nobody set out to find themselves in the situation they're in now - not you, not Amir, not Patrick, not Donald, not Jesse, not Jed, not Roger, not Brian, and certainly not average Bitcoinica users.

I don't believe for a minute that any of the funds stolen in the MtGox intrusion would have been recovered without your intervention, and you're right that it required non-trivial risk on your part. Hopefully the recovered funds will eventually be released to the liquidator for distribution to Bitcoinica creditors but right now even that remains unfortunately uncertain.

I think what many people find frustrating about this whole debacle is that while the individual decisions made by the various players throughout this drama are understandable in isolation, they have combined to produce an outcome in which everybody loses.  It's now a hopelessly adversarial situation which benefits no-one and in which the various parties are all equally convinced that they are "right".

I'm not going to argue that it's somehow immoral for VCs and other investors to act to protect their positions when things go wrong - few would live to invest in high risk ventures another day if they didn't.  And it's not "the worst" when they do so.  People might perceive it as somehow more personal, but it's not like more mainstream funding sources don't do the same thing every day of the week.

In business, as always, you're as popular as your last success or your last failure.  While it's true that everyone associated with Bitcoinica is currently tainted by that association, we can all cite business people who've had far bigger failures and returned triumphant.  Bitcoinica will one day be a footnote and nothing more.  It's only going to define those associated with it if they let it and if they never go on to do anything more successful - and you all have plenty of time left for more successful ventures in the future.

I think that everyone just wants this to be over and everyone is extremely frustrated that there's little they can do to bring the Bitcoinica drama to a close.  It seems like it's been dragging on forever even though it's only 12 months since the Rackspace intrusion and just over 6 months since Bitcoinica was put into liquidation.

You realise that every "exchange" in the Bitcoin world which is allowing the trading of securities/commodities is likely breaking a ton of laws in a number of jurisdictions.  The Securities sub-forum alone would keep regulators busy for a long time.   Just be aware that once regulators start looking into these kinds of services, the ones you like and support are just as likely to get caught in the net as the ones you don't like.

Amir, why did Donald remove the post?   The comment about lack of significant interest just sounds childish.  Not everyone sits online all day looking for new information related to Bitcoinica and it was a huge information dump which many people would want time to digest before commenting.

Perhaps even more importantly, Roger openly said in this thread that Zhou has some explaining to do.  That's a massive step forward.  It's the first time any of the Cartmell plaintiffs have publicly acknowledged that someone other than the defendants may have had a role in the loss of their funds and I commend Roger for doing that.  Even Jesse has recently suggested a willingness to entertain the notion that you guys were not solely responsible for the Bitcoinica clusterfuck.  

I get that you believe people are acting in their own best interests, and I share that belief (of course they are, that's what VCs do).  We may have reached the point where their best interests (which don't include obtaining judgements which are effectively unenforceable), your best interests, and the best interests of average Bitcoinica users are starting to converge.

The person in all of this who gets to assign blame is the liquidator.  If you want vindication, then you need to start communicating with the liquidator.  If you have evidence that Zhou perpetrated thefts from Bitcoinica, you need to give it to the liquidator.  If you have evidence that Wendon engaged in management activities which were not "safe harbour" activities during the time it was a limited partner of Bitcoinica LP, you need to give it to the liquidator, if you have evidence that material information about the true financial state of Bitcoinica was with-held from the general partners, you need to give it to the liquidator.

The community's attention span seems to be getting shorter all the time, so I suspect that this will be yet another information dump which may satisfy curiosity but which isn't going to result in better outcomes for average Bitcoinica users.

One thing which the OP might be able to clarify.  Bitcoinica users are listed in the liquidator's report as investors.  Two creditors are named - Wendon, and a company called Ator of which Tihan is a director.  Can you provide more information about where Ator fits and especially about whether it was used to funnel funds to Bitcoinica to cover losses and any conditions which might have been attached to funds provided by Ator?

Tihan's public statements indicate that Wendon had a secured interest in Bitcoinica and that Wendon would be waiving its right to be treated as a secured creditor.  Can you elaborate on the nature and the extent of the security?  

Were the Bitcoinica domain and code ever actually owned by Bitcoinica LP or did it just have exclusive rights to use them under certain conditions in the same way that TradeHill had the right to use the Bitcoin.com domain subject to certain conditions (and lost that right when TradeHill ceased operating)?

I realise that future liquidator's reports may answer some of the questions I've asked about the interests of Wendon and Ator.

I'm also curious about the OP's opinion regarding the Cartmell et all lawsuit and whether the OP believes that money is what the plaintiff's are hoping to obtain or whether from the defendants or whether there's something else they're hoping to obtain in settlement of the claim.

There's a lot more to be compliant than simply being licensed.  Properly licensed financial services get fined by FinSEC for breaching financial services regulations all the time and many of those services have entire departments devoted to compliance and infrastructure costing tens of millions of dollars which is supposed to help them meet their obligations.

At this point, Bitcoin services are vulnerable because significant fines would likely wipe them out and 100% compliance isn't easy without a substantial investment in fairly sophisticated compliance programmes.

Dwolla brought in special conditions for Bitcoin related businesses last year.  One reason why MtGox limited the amount of transfers going through Dwolla at any one time was fear that Dwolla itself would suddenly freeze their account.

Dwolla will likely review their policy regarding servicing Bitcoin related businesses again now.

We don't know how the seizure of the Wells Fargo account is going to affect MtGox operations.  It may have held a small amount of user funds or it could have held a large amount of user funds.

I can understand them not commenting on the legal issues themselves.  What's especially concerning is that they've made no comment at all regarding how those accounts being seized will affect their customers.  We have no idea how much was in those accounts and whether MtGox has enough reserves to return customer balances without access to those accounts.

The better people to ring about when the hell users can expect their funds back/how the hell they can get their funds back are probably DHS as neither Dwolla nor Wells Fargo has any control over when those funds are released.