Users' Bitcoins Seized by DEA

[mindtomatter]

Users’ Bitcoins Seized by DEA

By Brian Cohen and Adam B. Levine


The Drug Enforcement Administration posted an Official Notification that Bitcoin (i.e. property) belonging to Eric Daniel Hughes was seized for forfeiture pursuant to 21 U.S.C. § 881, because the property was used or acquired as a result of a violation of the Controlled Substances Act (21 U.S.C. §§ 801 et seq.)

DISTRICT OF SOUTH CAROLINA

13-DEA-581051, 11.02 Bitcoins, Acct.#1ETDwGUC1QcjYuehFr3u1FD3MvDaUs7SFy,

VL: $814.22 which was seized in Charleston, SC from Eric Daniel Hughes AKA Casey Jones on April 12, 2013

The DEA appears to have been the first agency to seize actual Bitcoins from an individual with this seizure.  Exactly how the Bitcoin was seized is not known as of this writing.  However, reading the top of the notice it appears that Mr. Hughes can request release of the seized property during the pendency of the forfeiture proceeding due to hardship.  How the DEA would return the Bitcoin to Mr. Hughes is also unknown.

The Bitcoin address referenced in the complaint recieved a transaction for 11.02btc at 17:10:36 Blockchain time on the date noted as “seized”.  This could mean that either the DEA took control of a computer with an unencrypted wallet and transferred the amount to a DEA controlled wallet, or more likely that this was not an in-person confiscation at all.   This could be an illicit “Silk Road” transaction, where US authorities set up a “honeypot” selling account, and accepted the 11.02btc as payment.   

Continued...http://letstalkbitcoin.com/post/53700133097/users-bitcoins-seized-by-dea

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[rme]

A new page in bitcoin's history.

[bennybong]

A new page in bitcoin's history.

True dat. Encrypt your wallet people, and stay off silk road!

You naughty drug dealers...

[btceic]

A new page in bitcoin's history.

True dat. Encrypt your wallet people, and stay off silk road!

You naughty drug dealers...

are people really this stupid to buy illegal drugs online?

[bennybong]

A new page in bitcoin's history.

True dat. Encrypt your wallet people, and stay off silk road!

You naughty drug dealers...

are people really this stupid to buy illegal drugs online?

Clearly, and definitely not staying 'safe'

Any drug dealer that gets a knock on their door from the DEA is doing their job wrong...

[moni3z]

More likely this guy forgot to encrypt his HD or left a USB stick lying around. Did this guy even use SR? He's probably some idiot advertising drugs on Topix or another public forum and was low hanging fruit they could pickup. That bitcoin address show no coins in it, it was moved to an account with 10000 coins.

Drug dealers should be tattooing their private keys or electrum wallet seed in code on themselves. Wait out your sentence and emerge to your narco fortune, hopefully bitcoin price per coin triples by then and you are multi millionaires lol.

This also isn't the first seizure, that guy who tried to extort (allegedly) Mitt Romney had all his coins seized  (371k BTC)

[r3wt]

the feds can crack your encrypted wallets very easily. all you have to do is dump the private keys with pywallet, and save them in atext file. then you delete the wallet.dat file. rename the app data folder for bitcoin, then reinstall bitcoin. prior to launch bitcoin, move the blockchain from the old bitcoin to the new app data bitcoin folder. now start bitcoin and import the private keys. you now have an unencrypted bitcoin wallet with all the funds of the old encrypted one. 

[td services]

It would be really fun to fork the chain back to restore the coins to their rightful owner.

[crazynoggin]

Probably signed for the package at the door thus giving the feds an excuse to get a warrant to search his computer where they found the address which sent the bitcoins for the drugs.

[r3wt]

Probably signed for the package at the door thus giving the feds an excuse to get a warrant to search his computer where they found the address which sent the bitcoins for the drugs.

yep, i don't understand these people out there who think they can buy drugs off the internet and get them shipped to their door with no consequences.

[gwern]

Probably signed for the package at the door thus giving the feds an excuse to get a warrant to search his computer where they found the address which sent the bitcoins for the drugs.

Entirely possible. That's how a lot of people get arrested.

yep, i don't understand these people out there who think they can buy drugs off the internet and get them shipped to their door with no consequences.

Because, they pretty much *can*. For the last few years, I've been keeping track of all publicly reported arrests/prosecutions/convictions related to Silk Road that I can find: http://www.gwern.net/Silk%20Road#safe There's like, maybe 20. Much fewer if you look only at convictions.

Now compare that figure to Christin 2013's sales figures where there are thousands of sellers over time and who knows how many orders of magnitude more buyers, and extrapolate from when SR was founded to now.

[r3wt]

Probably signed for the package at the door thus giving the feds an excuse to get a warrant to search his computer where they found the address which sent the bitcoins for the drugs.

Entirely possible. That's how a lot of people get arrested.

yep, i don't understand these people out there who think they can buy drugs off the internet and get them shipped to their door with no consequences.

Because, they pretty much *can*. For the last few years, I've been keeping track of all publicly reported arrests/prosecutions/convictions related to Silk Road that I can find: http://www.gwern.net/Silk%20Road#safe There's like, maybe 20. Much fewer if you look only at convictions.

Now compare that figure to Christin 2013's sales figures where there are thousands of sellers over time and who knows how many orders of magnitude more buyers, and extrapolate from when SR was founded to now.

you can get away with it a few times, but they will catch on eventually when you are receiving suspicious packages by mail. usually, they let you get away with it enough times to wait until you purchase felony amounts. it happened to a friend of mine. i can't speak for all states but my uncle is DTF here in Arkansas and this is how it works: they intercept your first purchase from silk road, and they give you a grace period. the second time you recieve a package, they open a file on you. the first time you receive an amount of drugs large enough for them to charge you with Possesion with Intent to deliver, conspiracy by recieving and felony possesion, they bust your ass as soon as you sign.

[franky1]

True dat. Encrypt your wallet people, and stay off silk road!

You naughty drug dealers...

+1

also to add

13-DEA-581051, 11.02 Bitcoins, Acct.#1ETDwGUC1QcjYuehFr3u1FD3MvDaUs7SFy,

VL: $814.22 which was seized in Charleston, SC from Eric Daniel Hughes AKA Casey Jones on April 12, 2013

value likely $814.22
now authorities are officially showing that bitcoin DOES have value  

lastly to add:
http://blockchain.info/address/1ETDwGUC1QcjYuehFr3u1FD3MvDaUs7SFy

very old news, seems the funds have been released and are moving freely again. so it looks like the police didnt just put them into a public key with unknown private key (effectively destroying them). which shows even when linked to drugs, the user will get them back

[gwern]

you can get away with it a few times, but they will catch on eventually when you are receiving suspicious packages by mail. usually, they let you get away with it enough times to wait until you purchase felony amounts. it happened to a friend of mine. i can't speak for all states but my uncle is DTF here in Arkansas and this is how it works: they intercept your first purchase from silk road, and they give you a grace period. the second time you recieve a package, they open a file on you. the first time you receive an amount of drugs large enough for them to charge you with Possesion with Intent to deliver, conspiracy by recieving and felony possesion, they bust your ass as soon as you sign.

'I like, knew this guy, and he told me this so you can totally believe me.'

If the packages are routinely detected and the files opened and the arrests happen like clockwork as you describe, where are the reports or records of this happening to thousands of people?

value likely $814.22
now authorities are officially showing that bitcoin DOES have value  

That might not be the value of the Bitcoins. I looked up that day in April on the charts and the weighted price was like $44, which means 11 bitcoins is half that...

[r3wt]

you can get away with it a few times, but they will catch on eventually when you are receiving suspicious packages by mail. usually, they let you get away with it enough times to wait until you purchase felony amounts. it happened to a friend of mine. i can't speak for all states but my uncle is DTF here in Arkansas and this is how it works: they intercept your first purchase from silk road, and they give you a grace period. the second time you recieve a package, they open a file on you. the first time you receive an amount of drugs large enough for them to charge you with Possesion with Intent to deliver, conspiracy by recieving and felony possesion, they bust your ass as soon as you sign.

'I like, knew this guy, and he told me this so you can totally believe me.'

If the packages are routinely detected and the files opened and the arrests happen like clockwork as you describe, where are the reports or records of this happening to thousands of people?

value likely $814.22
now authorities are officially showing that bitcoin DOES have value  

That might not be the value of the Bitcoins. I looked up that day in April on the charts and the weighted price was like $44, which means 11 bitcoins is half that...

The DEA only handles high profile cases. everything else is handled by local LEA and Drug Task Force. you can read about the arrests in the local newspaper. I would have never known about bitcoin if it werent for reading about the silk road arrest in the local paper. and to clarify, he's not really my friend we just worked together. I assume he's in prison now but i'm not really sure. he doesn't strike me as the type to snitch though.

[franky1]

That might not be the value of the Bitcoins. I looked up that day in April on the charts and the weighted price was like $44, which means 11 bitcoins is half that...

in april the LOWEST price was around $59 which had a high price of over $250 at the start of april and after the date of seizure, the low of $100..

meaning a valuation of between $59-$250 depending on what day the valuation was based on.

try better next time

[oblongmeteor]

It would seem quite difficult under current laws to pin the drugs on the individual unless they've actually been signed for or they've (enforcement agency) established payment for the merchandise in question (which they appear to have in this case, albeit retrospectively). That's the thing about Silk Road, Atlantis and Blackmarket Reloaded et al, - there is no way to link the purchaser directly to the delivery. Any individual with malicious intent and spare financial resources could order a whole host of illicit merchandise to a victim.

Of course, you could argue that receipt of multiple packages is tantamount to an admission of guilt, but this may be difficult to prove if the 'two-way' nature has not been established exchange (E.g. payment<->goods). What if the recipient just discards multiple packages as junk? Okay - it might be reaching but without establishing intent, it would seem that law enforcement might have a hard time making any charges stick.

If they get the Bitcoin Wallet, or somehow link the keys to you then this may be a different matter - but likely, Silk Road etc don't pay your funds from a deposited address any more than Mt Gox transmit BTC withdrawals for you exclusively from BTC address that you have used to deposit funds. Establishing this would mean law enforcement would need to seize the actual addresses that made the payment *and* show they were made to Silk Road etc. As far as I'm aware, SR does not taint it's deposit addresses with nice little notes to this effect...

[gwern]

That might not be the value of the Bitcoins. I looked up that day in April on the charts and the weighted price was like $44, which means 11 bitcoins is half that...

in april the LOWEST price was around $59 which had a high price of over $250 at the start of april and after the date of the low of $100..

meaning a valuation of between $59-$250 depending on what day the valuation was based on.

try better next time

Hm. I did make an error, I looked up the weighted price for 2013-03-12, not 2013-04-12. Whups. Regardless, it's still quite different from the listed price, since if you go to http://bitcoincharts.com/charts/mtgoxUSD and open the appropriate date range to extract the row 2013-04-12, the weighted price is 85.57 and that's $935 - more than $100 off from $814.22.

The DEA only handles high profile cases. everything else is handled by local LEA and Drug Task Force. you can read about the arrests in the local newspaper. I would have never known about bitcoin if it werent for reading about the silk road arrest in the local paper. and to clarify, he's not really my friend we just worked together. I assume he's in prison now but i'm not really sure. he doesn't strike me as the type to snitch though.

Plenty of local cases and ordinary non-high-profile people being hit...

[moni3z]

Mail smuggling is nothing new, and it would seem at least 90%+ of SR transactions go through without a hitch or else their forums would be full of people panicking about being arrested or questioned. SR is just small time tip of the iceberg personal shipments for the most part. The major traffickers are sending trucks full of drugs across the country or pounds of dope in the mail and even then are infrequently caught. I see maybe a news story about a major trafficking ring out of California being busted (that accepted cash, no bitcoins) every few months and they've always done something really stupid, so it would seem even an idiot can get away with it for a few years.

[franky1]

but my point is not about what the value is.. but the fact that authorites are giving bitcoins a value. instead of just saying Seized: syringe (no value)... they named bitcoin and valued it.

another thing to note about it.. out of the millions of dollars linked to drugs in that report.. out of the kilgrams of gold and silver linked to drugs.. only 11BTC is linked to drugs..

(i only got to page 5 and added up over 1.5million dollars of cash was seized..)

so lets hear a news story like this.

in a 3 month period 3 states seized over 1.5million dollars. over 4 years the entire US seized only 11BTC related to drugs, which is more of a drug related currency?