Bitcoin siezed? Help me understand this

[coinforlife]

We all have read about the 1 billion in crypto siezed by the gov. In one article it said that the funds were forefieted but that doesnt make sense. Please can someone explain in detail how bitcoin is siezed. I have read every article about this, googled it, and never seen an explaination on how it is done. Im asking for a technical explaination with facts. Does siezed mean someone was arrested and forced to give them control of a wallet? Or do they have a way to take control of a Wallet, and if the answer is yes, I would like to know how.

[1715261927]

1715261927

[1715261927]

1715261927

[jackg]

Someone was forced to give them access to the wallet...

They can't break the encryption on bitcoin and if used well, there's be 3 separate algorithms they'd have to attempt to break before being able to gain access to the funds.

[NeuroticFish]

Does siezed mean someone was arrested and forced to give them control of a wallet?

The only way to have the control of Bitcoin funds is to have (exclusive) ownership of wallet's private keys.
So yes, this means people got arrested, their computers seized and the coin owners were convinced (heh..) to give out the information to access the coins (wallet password, private keys, whatever).

[Legon]

When did it seize

[hv_]

https://www.justice.gov/usao-ndca/pr/united-states-files-civil-action-forfeit-cryptocurrency-valued-over-one-billion-us

Not legit - not your coins

[malevolent]

Read their documents, everything's in there.

https://www.justice.gov/usao-ndca/press-release/file/1334771/download

17. On approximately  April  9, 2013,  the Bitcoin  addresses that received the 70,411.46 B itc oin  from Silk  Road sent 69,471.082201  (approximately  $14  million   at the time  of transfer) to 1HQ3Go3ggs8pFnXuHVHRytP Cq5f GG8H bhx  (hereafter “1HQ3”).  


18. On approximately  April  23, 2015,  1HQ3 sent 101 Bitcoin  (approximately   $23,700)  to  BTC-e, a company that provided  Bitcoin  related services and operated as an unlicensed  cryptocurrency exchange.  In January 2017,  BTC-e and a Russian  operator of BTC-e were indicted  in  the Northern District  of California  for operating  an unlicensed  money  transmitting  business and for money  laundering through  the exchange.
[...]

23. On  November  3,  2020,  Individual   X   signed  a Consent and Agreement to Forfeiture  with the U.S. Attorney’s Office, Northern Dis tr ict  of California.   In that  agreement,  Individual   X,  consented  to the forfeiture  of  the  Defendant P roperty to the United States government.

24. On  November  3,  2020,   the  United  States  took  custody  of the Defendant P roperty from 1HQ3.
 

tl;dr someone who had stolen a lot of bitcoins from Silk Road later sent 101 BTC without using any mixers, coinjoin, etc. to his BTC-e account which must have been easy to tie to his real identity; most likely facing a choice of keeping the money and going to prison for who knows how long, or handing it over and remaining free they went with the latter option.

[figmentofmyass]

Someone was forced to give them access to the wallet...

They can't break the encryption on bitcoin and if used well, there's be 3 separate algorithms they'd have to attempt to break before being able to gain access to the funds.

it's possible (but unlikely) that they seized his computers and his wallets were unencrypted---no password---or something similar, like having a seed written down in plain text. in that case, the coins would be ready for the taking.

but this line from the article, "the individual consented to the government seizure on Tuesday" makes me think they arrested him and scared him into giving up the coins.

Not legit - not your coins

only if you give up the private keys.

[Findingnemo]

It depends on where they stored the bitcoin, if it is an wallet then there is no way to have control over the funds so they can't call it as seized, they can arrest the culprit and let those coins to be in sleep mode forever.Where as if it is in exchange's wallet then it is very much possible to seize those amount with the help of government since each exchange should follow the regulations of countries where they are offering services.

[yhiaali3]

In my opinion, there are two ways to hold Bitcoins by the government: either they obtained the private keys (for the wallet they held the bitcoin from) by confiscating the computer or by forcing the person to give them the private keys.
The second method: If you store bitcoins in one of the government-controlled platforms or wallets, then they can request the platform or wallet to block or freeze your bitcoin.

[HeRetiK]

tl;dr someone who had stolen a lot of bitcoins from Silk Road later sent 101 BTC without using any mixers, coinjoin, etc. to his BTC-e account which must have been easy to tie to his real identity; most likely facing a choice of keeping the money and going to prison for who knows how long, or handing it over and remaining free they went with the latter option.

Given the role that BTC-e played in laundering Gox coins I would assume that BTC-e was their mixing strategy.

It would still be interesting to know how they got caught though, IIRC BTC-e never did any KYC on its customers. Maybe they let their IP slip?

The second method: If you store bitcoins in one of the government-controlled platforms or wallets, then they can request the platform or wallet to block or freeze your bitcoin.

I mean in that case you might as well have stuck with a bank. If you're rich enough you probably would even get away with it.

[mixerbtc]

This really proves how essential it is to never tie your real-life identity to your cryptocurrency holdings.

[sunsilk]

This really proves how essential it is to never tie your real-life identity to your cryptocurrency holdings.

That's why many big time holders don't expose and disclose themselves holding chunks of bitcoin or any crypto holding. But there is also nothing wrong with that if you are aware of the consequence that you can have. In the case of seized bitcoin, they've done research and gathering of data and evidences.

We will see seizings to come soon once some of those old wallets that the authorities are monitoring starts to move and transfer.

[malevolent]

Given the role that BTC-e played in laundering Gox coins I would assume that BTC-e was their mixing strategy.

It would still be interesting to know how they got caught though, IIRC BTC-e never did any KYC on its customers. Maybe they let their IP slip?

There was a database leak in 2014, email addresses, password hashes, balances, and IP addresses were exposed. There may have been more leaks, especially after 2017-2018 problems/shutdowns of BTC-e and WEX, who knows how many employees had access to the data. It'd be enough if he used an email address he used for other stuff or one that logged he into from his home connection.

He may also have cashed out into fiat from BTC-e, hard to do that without exposing yourself and I'm sure the US government managed to find a lot of information on their fiat operations since the taking down of BTC-e.

[HeRetiK]

[...]

He may also have cashed out into fiat from BTC-e, hard to do that without exposing yourself and I'm sure the US government managed to find a lot of information on their fiat operations since the taking down of BTC-e.

Good point. I guess I've been following crypto for too long because it didn't even cross my mind that he might have cashed out fiat via BTC-e

[figmentofmyass]

Given the role that BTC-e played in laundering Gox coins I would assume that BTC-e was their mixing strategy.

It would still be interesting to know how they got caught though, IIRC BTC-e never did any KYC on its customers. Maybe they let their IP slip?

btc-e did start implementing KYC in late 2016 or early 2017. it became a requirement for bank wires to the USA. KYC was never required to trade there, of course.

but yes, it seems entirely possible that he let some PII slip even if there was no KYC. the FBI had a comprehensive copy of btc-e's database, after all. there was a time years earlier when it felt like btc-e was completely out of reach from the feds, almost invincible, and also highly trusted among criminals. i guess it could be easy to become sloppy in that context.

[lalambaz]

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[acquafredda]

Given the role that BTC-e played in laundering Gox coins I would assume that BTC-e was their mixing strategy.

It would still be interesting to know how they got caught though, IIRC BTC-e never did any KYC on its customers. Maybe they let their IP slip?

btc-e did start implementing KYC in late 2016 or early 2017. it became a requirement for bank wires to the USA. KYC was never required to trade there, of course.

but yes, it seems entirely possible that he let some PII slip even if there was no KYC. the FBI had a comprehensive copy of btc-e's database, after all. there was a time years earlier when it felt like btc-e was completely out of reach from the feds, almost invincible, and also highly trusted among criminals. i guess it could be easy to become sloppy in that context.

The fact that the likes of btc-e, mt.gox, cryptsy, mintpal and all the rest of it where basically all one-man shows should have created a big warning sign to all of us. One against them is not feasible.
Only satoshi was able to win them up to now.

[Argoo]

We all have read about the 1 billion in crypto siezed by the gov. In one article it said that the funds were forefieted but that doesnt make sense. Please can someone explain in detail how bitcoin is siezed. I have read every article about this, googled it, and never seen an explaination on how it is done. Im asking for a technical explaination with facts. Does siezed mean someone was arrested and forced to give them control of a wallet? Or do they have a way to take control of a Wallet, and if the answer is yes, I would like to know how.

Sometimes during the investigation, as a result of searches or other investigative actions, private keys from cryptocurrency wallets are discovered.  These can be paper records or information on a computer.  Or the owner of the cryptocurrency, as a result of various agreements, voluntarily issues private keys to pay off material damage.  These are the main ways how the private keys from wallets go to the investigation and then to the court, as a result of which the court decides on their confiscation.  If the investigation and the court only know the public address of the wallet, or a public transaction is known, they will not do anything with this information.