The stories about cryptocurrency used to come fast and furious back in its heyday of 2018. These days we get tales of people spending $2.6 million on fees to transfer $134 in crypto, and an Irish drug dealer losing access to almost $60 million worth of bitcoin when his passwords were incinerated after his arrest.
Not that this downturn is very unexpected. Back in mid-2018, none other than Warren Buffett and his partner called bitcoin “rat poison” and “turds.”
This week, however, we’ve got another wild story to tell with regard to bitcoin.
It would seem that a bitcoin wallet tied to Silk Road, the first modern darknet marketplace, which has sat dormant since 2015, just saw a little activity. Around ONE BILLION DOLLARS worth of activity.
UNBELIEVABLE – Someone was able to crack the password of the Bitcoin wallet I reported on only a short time ago and spend the $1,000,000,000 that was inside it!https://t.co/cEcdGcYzfI pic.twitter.com/XfBbkj1mHJ
— Alon Gal (Under the Breach) (@UnderTheBreach) November 3, 2020
Turns out that “someone” was the United States Attorney’s office in San Francisco.
The previously dormant bitcoin wallet was the fourth largest in the world containing more than 69,369 bitcoin.
When they were moved out of Silk Road they were worth around $350k, but have since appreciated more then 2700X to $955 million
— Tom Robinson (@tomrobin) November 3, 2020
The U.S. Department of Justice’s seizing of this wallet is the largest ever seizure of digital assets, according to Chainalysis.com.
According to Chainalysis data, Silk Road accounted for nearly 20% of total Bitcoin economic activity at its peak in 2013. Silk Road’s economic activity reached $435 million total (calculated based on the price of Bitcoin at the time) with a peak of just under $40 million in monthly volume in September of 2013.
Earlier this year, IRS-CI agents used Chainalysis to analyze bitcoin transactions executed by Silk Road and identified 54 previously undetected bitcoin transactions representing the proceeds of unlawful activity. They also found that a hacker, known as Individual X, stole those funds from Silk Road.
In 2015, Individual X liquidated some of the stolen funds at BTC-e, a cryptocurrency exchange that was seized by US authorities in 2017 for money laundering. But the majority of the stolen funds were held in Individual X’s wallet as Bitcoin’s price climbed, until this week when they were seized and moved to the US government wallet. They are now worth over $1 billion.
Another one of the more interesting notes about this case is the fact that Chainalysis says “the $1 billion seizure conducted this week was sent and confirmed within minutes.”
Normally, when the government wants to seize assets like cash or property it takes days or even months. Looks like bitcoin really is the future… at least when it comes to law enforcement seizures.