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I find it extremely amusing that the US government has over the last several years become one of the world's largest traders in bitcoin. It's not quite the path many were predicting back in the early 2010s, but Bitcoin has been full of surprises.
If history is any guide, the bitcoin will be auctioned off sooner rather than later.
Wait until you learn how many cars, guns, cash, and expensive valuables the feds seize a year. Not to mention businesses, land, and homes.
I just found a multimillion dollar SF condo and land in Liberia, Costa Rica on the US Marshalls website.
Do you have a link? I wonder if that condo is from the owner of silk road.
https://en.wikipedia.org/wiki/Ross_Ulbricht
http://www.drassets.com/#realestate
Can I buy these properties with Bitcoin? Any financing options or has to be paid in full?
Also drugs.
John McAfee has been on a bit of an unfortunate downswing, so it's great to see a big name bringing in institutional support during a crisis like this. ;-)
Unfortunate? That guy has done some bad things.
To be fair, when he still owned the mcaffe it wasnt that bad
It's not the government. It is 3 individuals within that organization sharing a multisig...one of whom has already retired
They could add it to the Fed's balance sheet along with all the agy MBS and tsy holdings they've added since the pandemic... ;)
Not unless they can prove it was ill-gotten. It has to go through a trial
Looks most likely that the government can keep it unless someone files suit to contest the seizure.
https://www.fbi.gov/investigate/white-collar-crime/asset-for...
.
> It has to go through a trial
Quite literally. They file suit against the items themselves, and always win.
Hard to win when you can't actually testify :) . CAF is such a joke. It really needs to stop (some success at that in some states). The Founding Fathers would never have allowed it.
If only that were true. The FBI usually goes with the policy of "might makes right".
Especially for relatively low-value items (like laptops, phones, et c) stuff that the state seizes cannot be cost effectively retrieved, even in the absence of a charge or conviction. You're looking at a minimum of $10k USD in legal fees to _begin_ demanding your stuff back.
The "innocent until proven guilty" policy is mostly a myth in the USA.
u just learned that the us is even a trader of bitcoin at all.
you say this not referring to a seizure, right?
Ok HN what the f is happening. Why are people minusing a question? like.. can i just know what is even wrong here?
Poor formatting/spelling/punctuation/readability. "u just learned that the us is even a trader of bitcoin at all" - how do you know what aazaa knew or didn't know prior to commenting?
In general just an incredibly low effort/value comment.
I don't know why you have been down-voted but candidate possibilities include the first sentence being read as snarky (even if it wasn't the intention) and using "u" for "you" in a forum where a more mature* form of expression is the norm.
* I don't intend snark either but I'm not sure how to put it politely...
I'm not the most saavy BTC person, but isn't part of the allure of bitcoin the ability to evade this type of seizure?
Yes and it took the US Gov 8 years to come up with a way to do so with mutual cooperation after knowing the identity of the owner and having a way to communicate with that owner. Very different than any random judge or municipal police freezing anything they want.
Have a stash that people dont know about, no series of shell corporations and foundations required.
>mutual cooperation
This is some quality spin, so kudos for that.
You make it sound like the government and the individual in question came to a friendly agreement, when what happened was the government discovered the person's identity and used the powers available to them to get a consent to forfeiture out of them.
>Very different than any random judge or municipal police freezing anything they want.
Not at all. Just as the authorities have to know an identity to freeze an account in a criminal matter, if they know your identity then they can compel you to give up your Bitcoin stash. You can refuse, but then you'll go to jail. It's no different than some drug lord burying their money in the desert somewhere and refusing to give it up to the feds when they come.
People keep pretending Bitcoin/cryptocurrency is magic and immune to real world pressures, and keep getting rude awakenings when they learn it's not.
Disclaimer, I know very little about bitcoin. If you owe the IRS tax money, they can take the money from your bank account without asking. They just do it. Can the same be done with bitcoin? As far as I know, they aren't able to. If that's the case, there's a difference.
They can "ask" you for your Bitcoin, but the question is phrased, "Would you rather give us your Bitcoin now, or would you rather spend some time in jail first and give us the Bitcoin later?"
It generally requires a court order to get money out of your bank. If it's a Bitcoin wallet, then they can just send the court order to you directly, and put you in jail until you comply (i.e. as many years as it takes). The differences seem a bit superficial to me.
>"Would you rather give us your Bitcoin now, or would you rather spend some time in jail first and give us the Bitcoin later?"
A billion dollars is an enormous amount of money. The kind of money that could covertly pay an entire prison worth of guards to look the other way for an escape attempt.
Of course, you end up on the run for the rest of your life, which doesn't sound especially fun.
You can fantasize about this James Bond stuff all you like, but one schmuck with a Bitcoin wallet probably is not going to pull it off. Bribing people isnât so easy and reliable that you can wave a fat stack of cash in someoneâs face and expect them to take it. People have lives and their careers tied up in their jobs and know that accepting a bribe isnât a sure thing.
It depends on where you live, sure. But in the US, thereâs a fair bit of resistance to bribery.
_Covert_ bribery is definitely frowned upon. _Overt_ bribery - hiring lobbyists, event sponsorships, regulatory capture, etc - is very popular, I'd even say it's more so than in other countries.
Do you really think that someone with $1B of Bitcoin could buy their way out of the kinds of serious felony criminal charges mentioned in the linked article through campaign contributions and similar? I doubt it.
I think that yes, it would be possible, especially if the person with the money was already in contact with organized crime at the level where they have a steady enough cocaine supply to sell it by the kilo (as was happening on Silk Road).
Going through a few intermediaries, I don't see a reason why a presidential pardon in exchange for $100MM in crypto couldn't be arranged either, especially in the dying hours of a presidency.
Obviously this is all silly spy novel stuff, but a reasonably intelligent person with mid-level or better criminal connections and literally a billion dollars to work with, coupled with a hell of a lot of motivation, could probably figure out something.
All that being said, outside of real political backing (i.e. continual payments every month), I'd doubt the person would remain free for very long after the deal was done.
Of course they could, theyâd just need to temporarily move to a friendlier jurisdiction while working on this.
IMO the short answer is, yes pardons can seemingly be bought in the Trumpian era of American politics. Whether $1B is enough, I don't necessarily know, but I don't see why the likelihood is something to dismiss out of hand.
$1B is enough, but you have to be spending it on the bribes before you get caught. Once you get caught your options are limited.
Just having $1B isn't enough.
1B gets you in the door. You still need to know the right people to pay off. You can't just google it. This is why you see all the billionaires at their billionaire parties, good old networking.
It's got nothing to do with Trump, here's Clinton:
https://en.wikipedia.org/wiki/Marc_Rich
Trump tends to pardon the people who will get him into the news cycle, like sadistic war criminals, corrupt or openly racist officials like Blagojevich and Arpaio, or whoever Kim Kardashian told him to.
Let's not make Trump seem responsible for our incredibly overtly corrupt country. Bill Clinton was a democrat, was president before Trump, and is notorious for his seemingly-corrupt pardons. I'm no history buff so I can't go back further than my own lifespan for further examples but I bet America has been this way for a long, long time.
https://en.wikipedia.org/wiki/Bill_Clinton_pardon_controvers...
https://en.wikipedia.org/wiki/List_of_people_pardoned_by_Bil...
Ehh, donât believe every political talking point you hear.
You should read Swiss investigative journalist, Daniel Ammanâs King of Oil.
The furor over these pardons including the Marc Rich pardon was 100% political.
Clinton pardoned relatively the same amount of people as previous presidents but with a heavy focus on âleftists.â
Also, Marc Rich had left the US before he started working across trade embargoes and singlehandedly built the OTC oil market. He also worked actively with the US on covert oil sales while being prosecuted by the DOJ.
Read:
-
https://en.m.wikipedia.org/wiki/The_King_of_Oil
You don't need to bribe people if you are on the run, and as long as you're not on the run for a fresh murder/rape case with your pictures spread all over the papers, law enforcement won't actively go out and fleece neighborhoods looking for you - they _will_ turn up at your home, your work and any known relatives/associates though.
First thing is to get away at least one town or two, preferably a couple counties, from where people might recognize you. Use rail or a taxi, and shut down your phone.
Pay hotels, food, gas, _anything_ in cash so it can't be used to track you down, get rid of your old phone/sim card/computer, _don't use Facebook to contact family or "associates"_, don't do drugs or at least stay away from trouble (bar fights) and for heavens sake don't drive a beater car, use rail or bus instead (flights are monitored).
Even crossing borders is easy in many cases. Dress up as a hiker and go for it. If you're not in a narc smuggling area and have sea access, buy a small rubber boat (with cash) and use that to get out of the country.
When cash runs out: agriculture, anything in the hospitality area (hotels, motels, pubs, restaurants), cleaning and moving services, construction/teardown _always_ have high demand for new able and willing staff, pay in cash and don't give a fuck about who you are as long as you show up on time and do your work without stealing stuff. If you're into sex work and it's legal where you are, it's a great way to make money.
You need a place to stay? Every area has some sort of ... shoddy district with cheap lodging, Craigslist or whatever can get you actual cheap rentals.
Other things to avoid? Mentioning you're on the run, bragging about whatever crime you did, stealing, getting into fights, driving a car (random traffic stops, "your tail light is broken"), breaking more than one law at a time.
You can get a fairly long run if you stick to the above, many years even without resorting to bribery. If you are in an area where bribery is the norm though - South America, Eastern Europe, Russia, Africa come to mind - then by all means go for it, might make your getaway a whole lot easier.
That would require they are all educated about bitcoin, which is unlikely.
The difference is fundamental in that the "property" still exists outside the control of the government. If a trusted source has access to it, they can still move it.
If such thing were to happen, and afterwards you complied, then there would be little grounds to hold you for contempt of court.
> If such thing were to happen, and afterwards you complied, then there would be little grounds to hold you for contempt of court.
The court system is not a computer program you can fool with clever tricks. If you are facing a court order to surrender money or other assets and try to evade it by moving the money around, you are just going to find yourself in deeper trouble. People have tried it before.
How do you surrender assets you don't have control over?
I'm merely pointing out that the differences are not superficial.
> How do you surrender assets you don't have control over?
If youâve arranged to share control of the Bitcoin wallet with someone else so they can move coins out of it in order to evade a court order, whatâs happened is youâve now _conspired with someone else_ to evade a court order. Say hello to the RICO act, or something like it. Maybe youâll be spending some time in prison after your assets are seized, and maybe your friend will be too. Itâs kind of hard for your friend to claim that they were innocent.
There are a lot of tough laws against this stuff which are designed to work against the mob and organized crime. Youâre not really inventing something new, youâre just doing old-fashioned mafia stuff, but using computers to do it. The court doesnât care that you used computers to do it.
I am a cyber criminal. One day I get arrested and the court demands I decrypt my wallets. I refuse and get hit with contempt.
My wife flees to Russia and moves the coin to another wallet, without my knowledge. Or maybe it was an agreed plan. Who can prove otherwise.
Eventually I give up and decrypt the wallets.
What are your legal grounds for prosecuting me for this further action? What can you prove? How are you going to prove that I conspired, and that this wasn't my wife going rogue?
You'd be fairly well boned on obstruction of justice and conspiracy to obstruct justice.
Any brilliant plan you think up in the course of a few seconds will be likely to run into the fact that the common law has a thousand _years_ of collective experience.
I didn't know we have thousands of years of breaking encryption and concepts like zero knowledge proofs.
There's no brilliant plan, there's just mathematics.
You don't understand my point at all. Which is also my point.
You just said it would be obstruction of justice, yet a transaction occurring from a known wallet while a suspect is in custody is not enough to prove that. You'd have to prove the conspiracy. You're hand-waving the details away in an attempt to dismiss the argument.
What does the prosecutor do when the funds get moved and the suspect is under lock and key? Because of the decentralized nature of crypto, you cannot even show who moved the funds. All you know is that they were moved.
So if you're a prosecutor, what are you going to show the judge to persuade them that an obstruction of justice has occurred?
Saying "it's math, yerhonner" is itself handwaving. My point is that a court doesn't need to fixate on the crpytographic impossibilities. They can rely on literally _any_ other evidence. They can gladly drag your friends into court to answer questions. Any of your other assets can be seized or frozen.
Folks who think cryptocurrencies are magic cheat codes are just not aware of the flexibility and enormous powers that a court has to overwhelm mechanistic attempts to defeat their decisions.
The defendant doesn't need to say anything, that's the point. The prosecution has to do all the leg work. And they may literally have no other evidence.
- Can the prosecution show where and how Mr. X moved the funds while he was in jail?
- Can they show who he communicated with or ordered to abscond these funds?
- Can they identify who controls the funds now?
- Can they identify anyone else who may have had control of these funds while in their previous wallet?
- Can the prosecution rule with 100% certainty that this was not a hack or theft by some other party, including police?
The answer to those is probably no. Is that enough to convince a judge/jury of reasonable doubt? I'm not a lawyer.
In that scenario, the coins ended up somewhere other than where the court ordered.
That didn't just happen. Someone intended it to happen.
Investigations and all available means will be used to obtain the coins. That could continue for the remainder of time all involved have here.
Yes. I'm not a lawyer, but this is now an issue outside the purveyance of the original court order to decrypt.
It requires new charges to be laid, evidence to be provided, and due process in reasonable time.
My point was the hard physics of it: the assets can be moved, and proving who moved it is very difficult.
That order is very likely part of a greater matter, and that will likely remain unchanged, IMHO.
Others, myself included, totally recognize the physics. That doesn't change the law much, just how it's enforced.
Should all that prove ineffective, as in justice is not served, we can all look forward to new and innovative law too.
In the end, we've got the basic human control issues in play.
The basic human remedies will also remain in play.
Prime example being it's quite possible to make life a real living hell for people, if nothing else. It's also possible to make that all being worth it very difficult to actualize.
Youâre talking about a scenario where your wife is moving to Russia avoid US jurisdiction. You can already do that. You can move to Russia, put your money in a Russian bank, and voilĂ , it is difficult for the US government to sieze it.
The point was to show the flexibility and control over owning your assets. Accounts can be frozen and its game over.
I donât understand what point you are trying to make, I guess. What Iâm hearing is that you can commit the same crimes, but now you can commit these crimes with Bitcoin, and maybe the law will catch up with you, maybe it wonât. It doesnât sound much like flexibility and control, it sounds like gambling that you are better at hiding assets in Bitcoin than other types of assets.
If you are living in the US and spending money to support your lifestyle you are very likely within the reach of the law, and the money you are spending has to _come from somewhere_ and _go to somewhere._ If you are not spending your Bitcoin and benefiting from it, then whatâs the point? And if you are spending the Bitcoin and benefiting from it, then law enforcement can investigate those transactions.
The point I'm trying to make:
Taking someone's assets vs coercing them to hand over their assets, are not the same thing.
You can take my gold, my dollars, my factories, my real estate, all by force.
You can take my freedom, you can take my life, by force.
You cannot take my Bitcoin by force. You might be able to put me through enough pain for me to give it up. But this is not a guarantee.
We have been discussing this in the context of being a sneaky cyber criminal with a just law system. But imagine you live in a nation where the government (military junta) is "nationalizing" all wealth and assets. Then tell me the best way to protect your money.
> We have been discussing this in the context of being a sneaky cyber criminal with a just law system.
If you were assuming that the law was just then youâve been having a different conversation. Iâve just been assuming that this is the US legal system, nothing more, nothing less. Do not assume that the US legal system is just.
The US law system is reasonably competent, has a global reach, and can out-wait you.
Resources are not unlimited. Time and attention can only be divided so many ways.
As we speak, billions of dollars of illegal drug cartel money sloshes along the international banking system, sometimes enabled by the banks themselves. The powers that be seem very ineffective at stopping them. I think you have too much confidence in the capabilities of these systems.
They aren't superficial. You aren't wrong in that assessment. But, you are ignoring how law works. Here's a little bit about that:
Criminal law is all about intent.
So, here's an example of the non superficial elements here:
Say, one gets the "gimme your coin" order, says no, goes to jail.
While in jail, the coins move, OK?
Person in jail cries, "Uncle!" and gives up the wallet.
Authorities find it empty.
Who had what intent?
If the intent is to circumvent the order? That's an additional crime period. It may involve others too, who may also be committing crimes. The intent will link it all back together somehow, and that's what the law will resolve. Crucially, the person supposed to give up coin won't end up with coin, because they are ordered to give it up.
If the intent was not to circumvent the order? Someone, somewhere did something with intent, and that intent will boil down to theft from law enforcement, who is entitled to that coin, due to the order. That person would now be a criminal, and on it goes. The person ordered to give up coin still won't end up with it, and someone else is now being hunted down for having stolen coins from law enforcement, who will do whatever it takes to end up with the coins so ordered to them.
Put in very simple terms, understanding intent and law can all look like this:
Say we find a dead person. Is that a crime?
If anyone else, other than the dead person, anywhere, intended that dead person end up dead, yes! It's murder. Could be for hire, vengeful, whatever.
Maybe someone was stupid. That's a different intent, and a different crime. Maybe it's manslaughter of some kind. Could be reckless, for example, or negligent.
If there was no intent associated with the dead person then there is no crime, and we've just, sadly, got a dead person.
Maybe the person stepped in front of a bus. That's suicide.
In all cases, there is a dead person.
Intent determines whether there are also criminals, what their crime is, and all that other stuff.
Make sense?
You're ignoring how prosecution works.
Intent alone does not prove anything, you need proof of act (actus reus to the mens rea).
To play along with your analogy; do you have proof that someone killed someone else? Even if you have a damning confession letter which proves intent. Do you have a murder weapon? Evidence that puts the person at the scene of the crime? Circumstantial evidence like phone location data?
Ironically intent is the far harder thing to prove, I have no idea why you chose to base your argument on intent.
I chose that argument because that was most germane to the discussion at hand.
You are quite correct in that a conviction requires more than intent.
However, intent is what differentiates crimes and it's an important part of any discussion of this kind.
You will note successful prosecutions can happen sans explicit proof of acts.
There is a solid case against that, but we all know it can, does, will continue to happen.
Finally! In more abstract scenarios like this, I wager intent will carry considerable weight too, and it will due to the lack of physicality.
Right, so going back to our original discussion:
How does the prosecution prove my intent to circumvent compliance orders? How do they prove that I moved the coins, or prove that I ordered the moving of the coins?
Without evidence, this is quite impossible.
The coins moved.
That doesn't just happen.
There will be more orders. Who had access to the wallet, etc... Wiretaps, observation, all of it is part of the game now.
In short, investigation will continue, as well all available means and methods applied to better understand who moved the coins and why they were moved.
That is likely to be an expensive, potentially freedom limiting, time.
Being unable to prove it NOW doesn't mean forever being unable to prove things.
Good luck with that game. It's very difficult, time consuming, dangerous, and expensive to play. Your opponents are willing to play hard indefinitely.
Best not benefit from the moved coins in the future.
Both implication and deduction are available legal means too. Remember that part.
Yes, evading the law would be work. But none of these options are possible if it was an account in a bank.
It does work very similar to valuable assets stored somewhere though, and the law as well as other means and methods are long established.
You should look up coin joins (tumbling) as well as Monero protocols. It will blow your mind. Introducing this kind of complexity into tracing assets makes things very difficult.
The real world value entry and exit points are ever present.
Mix it all one wants. It remains extremely difficult to avoid others knowing value, otherwise unaccounted for, finding it's way back. That plus a shake down of everyone the person ever knew remains potent, relevant and effective.
I have followed the rough tech developments. None of what I wrote is impacted too much. Obtaining real world value of any significance is where all the weak points are, and where long established means and methods play well.
People are super leaky. Records everywhere, redundant in many cases too.
Like I said, good luck!
Forward your adoption time frames by 100 years. Maybe even less.
There are no longer "entry" and "exit" points because everyone uses it and accepts it. Crypto is a good as cash. Anything you can do with a suitcase full of illicit hundred dollar bills today, you can do with your phone tomorrow.
In a future where cryptocurrencies are the new normal, probably only crypto that allows governments insight and seizure will be legal. All others will be illegal, and moving in and out to legal currencies will be the exit and entry points.
It's probable and possible, obviously governments will want to control cryptoassets. But this point has been discussed before.
The trade of "illegal" assets goes on and will continue to go on to the end of time, whether that's marijuana or prostitution services. The spectrum of legality will vary in different parts of the world. Like many contrabands, there won't be enough resources to enforce prohibition of it, the population may not see the point of its illegality (as there is not an obvious social cost), and eventually the tides turn.
Oh, there is this too:
What else can they invoke? Any other crimes? Maybe several very expensive, time consuming, personally exposing investigations start up.
Punitive methods will be on the table. I am not speaking highly of that, but will say it definitely happens.
The point is that the judge won't say, "Aha! You got me!", the judge will say, "Cute trick, now back to jail."
What grounds does a judge have to send the person to jail if they complied with the order to decrypt a wallet?
There can be any number of reasons the coin was moved:
- hacked by some 3rd party
- corruption by officers (
https://news.bitcoin.com/rogue-silk-road-agent-admits-to-ste...
)
- partner in crime moved them, with or without consent from suspect.
That seems fishy tho, you'll probably have to prove that, one of the core pruposes of judges is choosing who to believe, there is no such thing as a 100% fact.
The burden of proof falls on the prosecution to prove beyond a reasonable doubt.
Ex: Being in the vicinity of a crime when it takes place may make you a suspect (aka "fishy"), but this alone is not enough to prove guilt.
Buddy there are plenty of people in jail right now based on extremely flimsy evidence such as simply being in the vicinity of a crime.
All your comments in the thread are about "proving it," when, at the end of the day, it's up to 12 people in a box, most of whom don't know the first thing about bitcoin. Refusal to decrypt, wife moving Russia, etc... The government is going to make an extremely convincing case, with plenty of witnesses and all the time and money and lawyers they need. Meanwhile you'll be communicating with your defense lawyers from behind bars. You might be right -- maybe they can't prove any ill-intent -- but that's not a gamble with the odds in your favor.
It very well may be up to a jury (or a judge alone). And they'll hear questions like:
- Can the prosecution show where and how Mr. X moved the funds while he was in jail?
- Can they show who he communicated with or ordered to abscond these funds?
- Can they identify who controls the funds now?
- Can they identify anyone else who may have had control of these funds while in their previous wallet?
The answer is basically no to any of those questions. This is simply because of the nature of crypto and mathematics; a set of seed words allows anyone to restore access on any machine, from anywhere on the planet.
Juries hear circumstantial cases all the time where they have no witness, or no actual murder weapon, or no fingerprints, no DNA -- and more often than not, convict anyway. Just acting shady is usually enough, and the moment you refused to decrypt the wallet, you made yourself look guilty to the majority of jurors.
agreed, most times it is not a technicality that wins. The intent and situation play a strong role in american court systems.
I don't believe that in most sane juridictions a court would keep a suspect in prison indefinitely when the suspect claims to have forgotten the passphrase for a bitcoin wallet. I think the court would have to find the suspect guilty and sentence them to an appropriate custodial sentence (which in my personal opinion would be no longer than what they'd get for deliberately forgetting the passphrase).
The only incentive for the suspect to remember the passphrase after being sentenced would be earlier parole.
If the suspect tried to use the bitcoins after being released then another charge could perhaps be brought for perjury.
None of this is specific to bitcoins or totally new. It's roughly the same situation as when the court thinks that the accused knows where the stolen money is hidden, but the accused claims not to know. Courts must have dealt with hundreds of cases like that, so we could look up somewhere how they handle it in different jurisdictions, if we really wanted to know. I'm curious about it, but perhaps not that curious.
> _I don't believe that in most sane juridictions a court would keep a suspect in prison indefinitely when the suspect claims to have forgotten the passphrase for a bitcoin wallet._
I think you overestimate the sanity of jurisdictions.
See RIPA for example:
https://en.wikipedia.org/wiki/Right_to_silence_in_England_an...
If the money is in your bitcoin wallet, then the government has the same access to it as if the money were paper dollars hidden under your mattress. Coercion is available, but they cannot take it directly.
If your money is in a (regulated) bitcoin exchange, then the government has more-or-less the same access to it as if it were in a bank. The serve a court order to the third party you have entrusted with your money, and the third party complies, without your direct involvement.
Many of the arguments about bitcoin involve comparing apples to oranges. Bitcoin is a currency, its direct comparison is dollar bills, but most of the problems that it purports to solve are aspects of _banks_ not _dollars_. There is some argument to be made that you can do more with Bitcoins without involving a bank, but I see a lot of people putting Bitcoins in banks (or exchanges or other regulatable third parties), and a comparison of Bitcoin + surrounding financial institutions vs Dollars + surrounding financial institutions is not as favorable to Bitcoin.
I thought there was a constitutional ruling that you can not be compelled to remember passwords. Couldn't you just say "I forgot the key?"
You could say it, but that doesn't make it compelling testimomy.
States and even Federal courts have ruled in different directions, so this currently depends on where you are charged.
Some cases have put people in jail a long time for contempt when they refused to hand over passwords.
https://www.post-gazette.com/opinion/editorials/2020/07/01/L...
PPPSS. (Previous Poster's Point Still Stands). You could have cash buried in the desert and the IRS wouldn't be able to take it. Bitcoin is a way with both advantages and disadvantages to hide money, but it doesn't teleport you to another plane of reality where you're immune to the violence of the state.
That's happened in several high profile bank robberies. In one robbery (I think it was a robbery on a airport hanger where they robbed an armored car company) they guys went to jail and they have some $18 million or so split between four dudes.
Even after trial, conviction and sentencing, the court reporter said the Feds still weren't able to recover around $5 million of the total money and have no idea what happened to it.
> Can the same be done with bitcoin?
No, they don't have the keys, they can't sign a message as you.
This is the kind of magical thinking I'm talking about.
If you owed the IRS tax money, you have a legal obligation to pay it, the IRS isn't responsible for coming and finding it. Garnishment or seizure are tools they can use to get the money, but the obligation is always there. If you don't pay you incur fines and penalties, potentially criminal penalties.
You also have an obligation to report your assets. If you tried to keep your Bitcoin stash secret from the IRS to hide your money, you'd be looking at very serious criminal penalties, not to mention you could never touch your stash again if the IRS is coming after you without them immediately seeing you actually do have extra funds.
Stop treating this as some abstract technical problem that ignores real-world consequences.
>You also have an obligation to report your assets.
Do you? I own things that are worth money that I've never had to report to anyone.
I see needing to report a gain when the asset is sold, but the asset itself is less certain. Do I need to tell them about the $100 bill in my wallet?
If it's at an overseas brokerage, you'll need to report make FinCEN report each year.
Her's some actual legal information about the seizing of BTC by the FBI:
_In June 2014, the United Nations Office on Drugs and Crime (âUNODCâ) published a âBasic Manual on the Detection and Investigation of the Laundering of Crime Proceeds Using Virtual Currenciesâ (hereinafter âManualâ) providing a guide as to how the Bitcoin can be located and seized._
_The advantage of locating and seizing the Bitcoin wallet is that the potential complex jurisdictional issues that the use of virtual currencies creates, (as it operates in the online environment that blurs the national borders) can be avoided. The physical location of the instrument containing the Bitcoin wallet will in most cases be considered as the rightful jurisdiction for the purposes of freezing, seizure and confiscation._
_Despite the technological difficulty in the early detection of illegitimate use of Bitcoins, it is nevertheless possible although difficult for Bitcoins to be seized as proceeds of crime. The most effective way law enforcement authorities can seize Bitcoins is by obtaining the private keys which are linked to the Bitcoins or physically confiscating the âBitcoin walletâ._
Essentially once they have court approval and know where the wallet is - hard drive, USB drive, digital wallet. They will confiscate the wallet (similar to physical property seizures from a drug dealer) then just transfer the BTC to an account or wallet they control.
The above article is from Australia, but the manual is used internationally so I'm assuming it would be the same for the US:
https://www.lexology.com/library/detail.aspx?g=40d618a0-89e0...
> The above article is from Australia, but the manual is used internationally so I'm assuming it would be the same for the US:
As with all legal topics, not a good assumption.
> Essentially once they have court approval and know where the wallet is - hard drive, USB drive, digital wallet. They will confiscate the wallet (similar to physical property seizures from a drug dealer) then just transfer the BTC to an account or wallet they control.
You know this requires them having access to the private key. There is no "just transfer the BTC", there isn't even a guarantee that they are the only custodians of it as the wallet itself can be replicated and the "physical location" being in many places at once. There is no way of disproving that, only assuming based on most people's poor operational security.
"Have a stash that people dont know about,"
... is probably illegal in almost every known reasonable country because it usually amounts to tax evasion.
So I'm not sure about this meme of "mega millionaires hiding their money is 'bad' if they identify as 'CEOs' but 'maybe good' if they identify as 'hackers'".
do it with money you already paid tax on lol. so so many options
If you make more money with this money you stash away, that is taxable as well in most places in the western world.
You normally also are obligated to inform the government wherever you are about your holdings in the west.
The way to get around this, is to start an offshore company in whats referred to as an tax haven. Basically its a company that has an unknown owner normally some legal secretary or a lawyer firm stands as owner and somewhere there is a presigned agreement by them that transfers the ownership of the shares in the company to someone else that you can write in(TBD). So the company is basically in limbo between owners .
But yeah, that how you would do it, of course its a bit more, but that is the gist of it.Just make sure the legal company you hire or find on google isn't hacked, lol.
Oh, and also, don't get a company card with this offshore company and use it to buy groceries, the tax people look out for that sort of thing :)
I don't think an offshore company gets around the requirement to report your holdings. You would legally need to report on that company and pay taxes on any profits if you are a US citizen.
But you could likely defer taxes this way, by holding the bitcoin with the offshore company. You would then only pay taxes when you liquidated the bitcoin and paid yourself something.
Whereas if you held the bitcoin yourself, you would need to liquidate to pay taxes every year that it increases in value.
This is actually a good point. The government know you've been paid it and you've paid tax but that doesn't mean you can't rightfully hide the rest of the money away somewhere.
They don't know if you spent the rest of it immediately or kept it if you never put it into a domestic bank.
You can indeed 'rightfully stash $1B in cash under your mattress' - but almost any other private/public storage mechanism will involve gains/losses which have to be disclosed.
Wouldn't they only have to be disclosed when they get turned back into usable currency within your jurisdiction?
US citizens are taxed on their worldwide capital gains (and income).
Right, but capital gains tax is calculated based on the profits relative to the currency in which it was bought and sold with. You have to sell the bitcoin or exchange it for another form of recognized currency in order to pay capital gains on it. This is more or less how stocks work as well.
I believe those are generally only taxed when ârealizedâ.
No 'lol' because gains/losses on those assets relate to taxation, also, in many regimes you'll have to declare it anyhow.
which you only have to worry about when you have to tap into the rainy day fund, or when the collateral gets liquidated
Because you can borrow against it instead of selling and without touching a financial institution, and this gives you liquidity without a tax event
Welcome to the 2020s
>Because you can borrow against it instead of selling and without touching a financial institution, and this gives you liquidity without a tax event
But how do you repay the loan without liquidating the bitcoin?
You can pay principle and interest with other dollars
No different than unsecured debt
"which you only have to worry about when you have to tap into the rainy day fund, or when the collateral gets liquidated"
If your 'rainy day fund' is a stack of bills in a box, sure, but other than that there isn't much you can do with significant amounts of money that isn't going to involve some kind of transparency.
Literally trading those dollars for anything else involves gain/loss.
You're not going to be able to 'borrow against' anything under your mattress, it will have to be in some kind of regulated security, a bank account, or real estate - but it's moot - exchanging one asset for another is on the whole financial neutral.
More pragmatically, if you're 'borrowing against sums' you will be paying interest, there's almost a 100% chance you'll want to declare that against any other form of income for the tax shield.
Again, all of this 'hide your money' stuff is really the domain of tax evaders and likely the #1 flag for tax audits.
ok. the only thing directly applicable in your analogy is that if you choose to report something for deduction, then you will need to account for the rest of the capital.
there is no obligation to report possible deductions.
you wouldn't here and you would remain compliant if you paid the interest with money you already paid taxes on.
the rest of your analogy just doesn't work.
>but isn't part of the allure of bitcoin the ability to evade this type of seizure
The government didn't crack the wallet address. They 'compelled' the owner to give it to them. Bitcoin was not designed to evade that type of seizure.
As always, the extremely relevant XKCD:
Event the url is relevant...
I think the word you're looking for is coincidental.
> why? Honest question, I don't know.
More directly, this is the number of electors in the electoral college.
why? Honest question, I don't know.
That number too.
It's pretty impossible to beat the $5 wrench attack (or in the case of the government, 5 years in prison) unless you have anonymity, which Bitcoin does a very bad job of.
There is no way they were only facing 5 years. Any sane person would do 5 years for a billion dollars.
It's stolen property. They're never going to be able to keep it even if they do do some prison time. If their claim is that it's truly lost and they no longer have access, and then the funds ever move again on the blockchain, boom, right back to jail under contempt and other charges.
You can also do the time and leave the US after.
It's worth a billion dollars today. But in 5 years, who knows? Could be worth $10B. Could be worth $0.
Ooo so brave, saying Bitcoin will go to 0! No one has heard that before!
Is there a particular reason for the snark? We are talking about essentially a 5-year blind trust in a historically volatile asset.
Or just set up 2fa and give the second factor to a third party whom the state has difficulty compelling. Granted this does require unconditional trust.
Well, it is stil a matter of research of how to maintain anonymity, and the best ones are keeping their secrets.
Right. It's nothing half a million dollars worth of jailing costs can't fix.
Luckily there is Monero
I don't know why Monero isn't more widespread. It's anonymous, cheaper than Bitcoin, and faster. Plus, there's xmr.to, which has integration with a bunch of wallets so you can send Monero directly to a Bitcoin address and they'll convert transparently.
Well if it becomes popular, holding and dealing with Monero will be made illegal and ISPs will be tasked with blocking it.
Governments can be _very_ vindictive if their tax revenue is threatened.
If you have a use case for Monero, you're better off it remains exotic enough that it flies under the radar.
Not sure why you're getting downvoted, to my knowledge you're correct.
I didnât downvote, but Monero is not magic. State-level attacker absolutely can trace real-world recipients of money âlaunderedâ through Monero.
See âBreaking Moneroâ series on YouTube.
The IRS even has a $625k bounty for anyone who can break privacy coins like Monero!
https://heraldsheets.com/irs-will-pay-625000-cracks-monero-n...
people don't realize this. If there is no flaw in the current implementation of Monaro, then it can't be traced. It is entirely possible that something has been figured out and allows tracing, but that is no different than using bitcoin. So I don't get the hate towards Monaro.
\
would you sell the secret how to break privacy coints for $625k?
I'd be extremely surprised if this bounty was anything else than misdirection and bait.
Multisig or SSS.
SSS?
In my circles, Thatâs instructions forgetting away with murder: âShoot. Shovel. Shut up.â
Does it mean something else in this context?
The regular reply to that strength is usually the rubber hose threat. Which is pretty much what happened here it seems with the person who had control of the private key in custody of the government.
This is the XKCD you're looking for:
What does that have to do with a rubber hose?
The proverbial rubber hose serves the same purpose as the $5 wrench mentioned in the comic.
Rubber hoses were used by police to beat confessions out of suspects without leaving visible evidence of a beating.
At least according to the materials I've read.
It's a torture instrument
Rubber hose, hammer ... same usage, slightly different âimpactâ
The comic uses a wrench, "rubber hose" is the older way of phrasing it:
https://en.wikipedia.org/wiki/Rubber-hose_cryptanalysis
There really is an XKCD for every occasion.
The point of bitcoin is that you can drive across the country "carrying" $1B worth of assets, and if you get pulled over by the cops it won't be found. Try doing that with gold bars or stacks of cash.
I am glad we finally have a solution to this pressing issue.
I know it sounds silly but itâs legit. Tons of stories of people driving out to buy a car, getting pulled over, having $10k seized without being charged with a crime, and then having to sue to get it back under a presumption of guilt.
Bitcoin is harder to seize under civil asset forfeiture.
ETA: in the US. Not sure about other countries.
Or they could have just used a bank account.
More people have lost money to Bitcoin scams and exchange fraud (see e.g. Mt Gox) than have lost their money to civil forfeiture. Depending on the price of Bitcoin, but (based on the current price of Bitcoin) more $$ has been lost to crypto fraud as well.
Some people can, but there are people who can't use a bank account. There are a surprising number of people who can't or don't.
One reason is that banks will refuse to open an account for people whose records show past behavior they don't like (bouncing checks, overdrawing accounts, leaving fees unpaid, etc.).
Some other people could open a bank account but have practical reasons not to. For example, identity theft. Someone drained all your accounts, but you still have a good-paying job. If you open another account, maybe they will drain that one too? Maybe not a good risk to take when you're trying to stabilize your situation.
Another example, probably more common, is poor people who have court judgments against them from people they owe money to. You have medical debt, or you got evicted and owe back rent, or you messed up withholding and you owe the IRS back taxes. You might be living so close to the brink that your monthly income is $1500 and you need $1499 to survive. The court lets the creditor garnish money from your account, so one day you check the balance and find $500 gone, and you can't pay your rent or buy gas to drive to work. So you prevent that scenario by dealing entirely in cash and not opening an account.
> More people have lost money to Bitcoin scams and exchange fraud (see e.g. Mt Gox) than have lost their money to civil forfeiture.
Can you please back this statement up with some citations for this? I'd be hugely surprised if the number of victims, or even the USD value, of BTC related fraud or foolishness outnumbered state sanctioned theft in the USA, considering how lucrative the theft is for the state, without any need for laundering the ill-gained funds either.
At the same time, it would be remarkable if more people lost money, or more money was lost, in BTC than through civil forfeiture, and possibly an ironic statement that exploiting foolishness is the quickest way to riches, rather than deploying state sanctioned violence.
This thread compares holding your wealth with a third party (such as in a bank) with holding your wealth yourself (such as in Bitcoin).
Your example isn't about Bitcoin, it's about third parties.
Far more $$ has been lost to third parties than to Bitcoin.
Lehmann alone lost almost 300B USD of others peoples money. Banks are safe until they arenât.
Not even remotely the same thing. Lehmann Bros was an investment bank, meaning that the value of accounts was tied to the value of the securities investments contained therein, and Lehmann engaged in trading activity on behalf of those account holders. (And note: by 2013, all of Lehman's account holders had been made whole for their losses
https://www.ft.com/content/f06762de-cf94-11e2-a050-00144feab...
)
Savings accounts (and checking accounts) are regulated very different from investment accounts.
> Not even remotely the same thing.
Well, Mt. Gox and Bitcoin?
Not even remotely the same thing.
Right, because Mt Gox was purporting to be a bank where you could store your Bitcoin, when it actuality it did not have sufficient crypto to pay out depositors as a result of many hacks and other shenanigans perpetrated by their own employees or contractors and it was openly lying to customers. (By the time of the fatal "hack," Mt Gox was already insolvent.)
Lehman was an investment bank, not a commercial bank. Commercial banks aren't allowed to go into crazy leverage like Lehman did.
proof of your claims?
You won't believe how pressing it is for Chinese merchants in Russia. Crypto is their only way to repatriate funds back into China, and they are moving billions that way. There is a huge ecosystem around this in Moscow currently.
There are many places around the world where the government is not the good guys.
Including the US of A
A more relevant example is escaping a country in chaos with your wealth intact. Exactly like how people have done when they left Venezuela, using Bitcoin to bypass the border control.
For some people, it is a pressing issue. Especially for people from corrupt or despotic states.
LAW ENFORCEMENT NOW SEIZES MORE PROPERTY FROM CITIZENS THAN BURGLARS:
https://www.illinoispolicy.org/law-enforcement-now-seizes-mo...
.
Plenty of rich people drive or fly across the country all the time "carrying" $1b worth of assets. They're called bank accounts, and you can access them with these things called "check books" and "debit cards" that you can use in infinitely more places than you can transact Bitcoin or other crypto.
Sounds all well and good until your bank account gets seized by the authorities.
So what country are your funds in and what are you doing that has lead to the funds being seized? Don't you think we need trusted authorities for enforcement?
>So what country are your funds in and what are you doing that has lead to the funds being seized?
The US? Random example:
https://www.seattletimes.com/nation-world/the-dea-seized-her...
>Don't you think we need trusted authorities for enforcement?
Perhaps, but not everyone is lucky to live in a low corruption country.
Access is not the same as ownership.
Your account can be frozen and confiscated with little recourse.
Your account can be frozen and confiscated, but you have legal recourse. There are several anti-forfeiture legal groups that will take these cases on _for free_ as a matter of principle (and because they generally get court-ordered legal fees from the prosecuting agency if they defeat the forfeiture).
Oh, you're assuming the legal system is the same everywhere in the world as the US.
Let assume the person is in China. Or Venezuela.
In China or Venezuela, if your bank account is seized by the government, it's because you're already in prison, so not having access to money will be the least of your concerns. Rather, you will be worried about whether you'll ever get to leave prison, or more immediately, what form of mistreatment you will receive from the guards and whether the rest of your family was rounded up as accomplices for whatever alleged crimes you were charged with (if any).
And amongst that, the property remains out the hands of the government.
Perhaps it will be one day be moved and utilized by family descendants, whom have had time to find themselves in safer conditions.
That's the difference.
True, but you can do that far easier with existing assets.
Authoritarian countries can always simply block their citizens' access to exchanges, and even just outlaw crypto ownership.
In a near future, we might not even need exchanges. Pay your rent with crypto. Buy groceries with it.
Even if its outlawed, that only slows it down at scale. People will still accept it if it has value. Drugs/prostitution/contraband can be traded even in the places where it is most strictly punished, outlawing it does nothing.
That's not the use case here. The process you are describing leaves us vulnerable to the government and state actors who can access your bank accounts, see the records, and steal your money. We have absolutely no reason to allow government in to our finances, so we must do things like this.
With crypto, the only way the govt is doing that is if they coerce you. Try that with a "bank account".
>They're called bank accounts, and you can access them
In lots of countries this is not guaranteed. Most recent example is Venezuela, central authorities imposed limited withdrawals.
The same is true of cryptocurrency. Try accessing it without power _and_ internet.
You can obtain you Bitcoin with a portable power generator and satellite dish if you are on the move or cannot access conventional utilities.
Sure but to get satellite internet, you need to provide some id to the satellite internet company and they can probably track you back.
Fair point!
Isn't it funny how "the point of bitcoin" seems to change as it proves to be unsuitable for each of the increasingly narrow niches it fills.
if the world doesn't agree on monetary policy, then it seems beneficial to be able to circumvent that
Or securely send it over the internet for $12. Quite a bit cheaper than transferring $1B via the banking system.
With a bank they don't need your permission, they can just take your money straight from the bank.
With cryptocurrencies they have to threaten you. And if you're ok with spending some time in jail (for court contempt), there's nothing they can do.
Where by "some time in jail", you mean, "The rest of your life."
Many people will make very expensive trades when facing long prison sentences, including people for whom a mafia torture and hit is a realistic possibility.
So "being ok with it" hand-waves away a very large amount of duress.
You can be held in contempt of court indefinitely.
That depends on your circumstances. There may be an 18 month limit in some situations.[0]
[0]
https://arstechnica.com/tech-policy/2020/02/man-who-refused-...
Right, for a witness refusing to testify in a court proceeding in which they are not one of the parties.
It's different when you're a defendant or a party to the proceeding.
That's for "refusal to testify".
If you read the first paragraph you'll see it spelled out:
a federal judge held him in contempt
And if you read a bit farther, you find the reason why it was limited to 18 months:
> After losing that appeal, Rawls raised another challenge: the federal statute that allows judges to hold witnesses in contempt for refusing to testify, passed in 1970, states that "in no event shall such confinement exceed eighteen months."
This limit does not apply if you are not a witness.
Even if it did, the way weâd find out is a defendant suing the government for their release, and for that case to appeal its way up through the circuits, possibly to the Supreme Court. That appeal process would take years and would probably lose at most of the stages. During this entire time the defendant would be imprisoned.
Yes, exactly true. You can be held in contempt of court indefinitely, if it's possible for you to comply with the court order. There is no conventional "due process" because you are free to leave once you comply.
Yes, but they didn't hack into the wallet. They basically found the person who was in-charge of the wallet and forced their hand (read: civil forfeiture) in order to gain access to the bitcoin.
I'm not sure civil forfeiture is the right term for what happened here. I don't think the government can compel individual x to give them the wallet's key. Unless they found the key laying around I'd say they likely they built a case against them and used that to get them to trade the billion dollars in exchange for dropping the case.
_I don't think the government can compel individual x to give them the wallet's key. _
In the U.S., they can compel someone to provide a password if doing so would not violate the owner's Constitutional rights (such as, for example, if it would be self-incriminatory). Courts in the U.S. have different thresholds at when that line is crossed, but a bright line rule is that providing a password is not self-incriminatory if the criminal case has already been litigated to its conclusion (i.e., the suspect has either been found or plead guilty, or was found not-guilty and double-jeopardy protections apply).
That would be my assumption, but I'm confused: The statute of limitations would have expired already for the crimes they mention in their court filings.
Some actions can extend the statute of limitations. In almost all states, fleeing the jurisdiction pauses the statute of limitations for the duration the suspect is not in the state. (Some states consider leaving the jurisdiction to be the same as fleeing, even if the intent was not to avoid criminal charges.)
Concealment is also generally grounds for tolling the statute.
And in some states, if criminal acts are related, the statute for the entire body of crimes doesn't begin until the _last_ related criminal act.
See for a breakdown by state:
https://criminal.findlaw.com/criminal-law-basics/time-limits...
Thanks for the correction.
the article says: "In the civil forfeiture complaint, Anderson explained that the government took control of the wallet on Monday, after an unnamed hacker agreed to forfeit the cryptocurrency."
It wasn't clear how the "agreement" was reached and what coersion was involved.
The Feds seized it from "Individual X" who hacked the account, they didn't hack and seize the account directly
You're assuming there actually is an Individual X. It is possible he was fabricated in order to hide that the Feds indeed did gain the password for the wallet.
If they did, they lied to the court.
"On November 3, 2020, Individual X signed a Consent and Agreement to Forfeiture with the U.S. Attorneyâs Office, Northern District of California. In that agreement, Individual X, consented to the forfeiture of the Defendant Property to the United States government."
I donât think that would exactly be the first time for that to happen.
Nothing there about "Individual X" being Ross Ulbritcht
It wouldn't have been. They claim "Individual X" robbed silk road. My understanding based on the documents from Ross' arrest is that X exploited a bug in the site to get the user list then extorted the operator.
Maybe it took 8 years to crack the password?
Exactly. And thereâs no reason to announce to the world that such cracking can be done when you can invent Individual X.
Thereâs no reason to think that Bitcoin is more resistant to rubber hose cryptanalysis than other financial instruments. If a US prosecutor can bring evidence showing that you are in control of a stolen asset, cryptography isnât going to save you from being indicted.
Seems like they somehow coerced the owner to transfer the bitcoins instead of targeting the wallet itself.
It only provides this property when you've secured your keys, preferably in an offline wallet. These were hot wallet funds, so they're vulnerable to both physical and virtual seizure.
Your BTC is only as secure as your wallet.dat file
The guy was a retard to put all his eggs in the same basket...
Thatâs certainly an aspect of its marketing, we can see that the reality is quite different. Individual X âagreedâ to forfeit the wallet:
This gives the US government a lot of power over bitcoin...
That both gives the government an incentive to let bitcoin thrive (to protect it's holdings), but also an opportunity to substantially manipulate bitcoins market price, possibly down to nearly zero.
Or the keys to these bitcoin will sit idly in a filing cabinet forever...
They will auction it off as soon as possible like they did several times before.
I'm not sure why the bitcoin price has gone up in response to this news, because it means more supply is coming to the market soonish. These coins might have been presumed lost before. Certainly they would not have been able to be sold on any legitimate exchange. Now they will be washed clean and enter the markets.
On the other hand, a billion dollar bitcoin auction from the US government will generate some publicity, and publicity definitely drives the Bitcoin price up. We'll see which effect dominates.
There's another billion+ hoard of bitcoins which has the potential to be released to the markets in the next year or two, which is the MtGox reserves. Crazy story: MtGox went bankrupt after losing a bunch of bitcoins in hacks, but during the years-long bankruptcy proceedings the bitcoins they have left have been frozen, and their value has gone up so much that they could exit bankruptcy and pay all their debts many times over. But it's unclear what the bankruptcy court will ultimately allow them to do.
If the MtGox bitcoins are released to their many thousands of creditors (MtGox customers who had balances at the time of collapse), I expect a crash in the bitcoin price as many will choose to sell at the same time. This is different from the government bitcoin auctions, where there are only a few winners who probably don't plan to sell right away.
> the Bitcoins they have left have been frozen,
The trustee actually sold bitcoins during the 2017 run up in price and secured enough funds to pay off the cash value of the bankrupcy.
MtGox might be able to pay people the dollar value of their investment at the time, but still not the actual # of bitcoins.
True, but by essentially forcing creditors to hold their bitcoins instead of allowing them to sell, it's likely that MtGox has actually done most of their creditors a perverse favor, and they will end up with more money than if they had received their full bitcoin balance in 2014 and sold some of it since then. Assuming they are actually allowed to distribute the full value to creditors in the end, either as bitcoin or yen (the bankruptcy is in Japan).
The funny thought is that once the creditors are paid off in dollars/yen, the remainder goes to the shareholders that usually get wiped out in a bankruptcy, but not this one.
In this case the majority shareholder is advocating for the money to be distributed to creditors rather than given to him.
https://www.ccn.com/mt-gox-ceo-mark-karpeles-tells-creditors...
But bitcoin is a currency. If I lost $100,000 to something like this and it took a few years to resolve, I would expect to get back $100,000, not some other form of currency that was worth $100,000 at the time. What I'm saying is that MtGox can't claim they're making people "whole" from their losses by giving them what their money was worth at the time. Plenty of those people would have held on to the bitcoins and had their full value.
Sure, I don't expect MtGox to be able to make everyone whole. I just don't think it's accurate to say they're doing so by giving them their 2014 dollar equivalents.
The creditors' claims were converted to yen at the time of bankruptcy by court. MtGox has no say in the matter. Neither I nor MtGox are claiming that they are going to make people 'whole' in terms of the bitcoin balances they had. But MtGox (Mark Karpeles) is trying to get the court to allow them to pay creditors a whole lot more than their claim value, instead of distributing the excess to shareholders, and to do it in bitcoin instead of yen.
All I'm saying is if you compare a hypothetical scenario where the bitcoin was distributed to creditors in 2014 to the hypothetical scenario where they receive it today, it's practically certain that creditors' aggregate wealth is astronomically higher in the latter scenario, because very few would have held the bitcoin long enough or sold at the right time to realize all of the 15x+ appreciation that has happened in that time.
> Certainly they would not have been able to be sold on any legitimate exchange
I'm ignorant about this. Would they not have been able to be sold because there's some kind of master list of coins related to criminal activity, and exchanges blacklist them? Or would buyers somehow know specifically which coins they'd be buying and their provenance?
Well, I don't know exactly how much policing of this kind exchanges generally do, but these coins in particular were very closely watched and would not have gone unnoticed, wherever they ended up. Bitcoins are 100% traceable, and when these coins were moved yesterday it was instantly posted on many news sites, before today's announcement that it was actually a seizure by law enforcement.
My guess is that almost all exchanges would flag any account that deposited coins from a list of known tainted addresses like this one, and either immediately freeze it or prevent withdrawals. And any exchange that didn't do it automatically would do it manually after it hit the news.
> Certainly they would not have been able to be sold on any legitimate exchange.
May I ask why? (Genuine, not a crypto expert). Do exchanges by default trace any bitcoins back and see if they were connected with illegality? Is there a list of tainted bitcoin addresses that are effectively worthless?
Many reputable exchanges and other Bitcoin service providers use anti-fraud/AML services which will flag transactions involving Bitcoin with an apparent history of laundering or other malfeasance. This is more or less mandatory in the US and many other countries via AML treaties. There are, of course, exchanges with no such scruples, but converting Bitcoin to currency does become more difficult when it has a known suspicious background, particularly if you want to deal with an exchange in a country with reputable financial regulation.
This is of course similar to the situation with conventional currencies. Banks will refuse to open an account if they suspect the money you're depositing is laundered. Bitcoin just makes this process far more amenable to automation, since detecting a history of laundering becomes a graph analysis problem.
Is $1B in bitcoins enough to manipulate the price more than say ... just $1B in cash, something the government could somewhat easily just have if it wanted to do so?
I feel like if they wanted to, they'd already be playing that game.
It's not out of the realm of possibility this would give an actor more of an opportunity to do so, but it hardly seems required if the motivation was already there. I think it would already be happening if that was the case.
In the meantime the gov has auctioned off their bitcoins like they do other property pretty often.
I would think they'd have access to plenty of legit and illegitimate wallets as well. So many people are thinking they are doing anonymous transactions while governments have wallets associated with our facebook profile.
Yeah it seems kinda weird they'd try it with what is a kinda well known wallet... something folks are watching.
No, it doesn't. $1B in bitcoin is only 1% of the bitcoin market cap. The bitcoin world can basically just move on and ignore this if they want to.
Despite loads of blockchain haters on HN, the government recognizes that bitcoin has value and has formal processes to seize, custody, and auction off the assets to add money to the federal treasury.
I simultaneously believe blockchain vastly underperfoms its promises and is a net waste of so much investment (human talent + time + capital) and _also_ believe that bitcoin can be exchanged for real US dollars.
+ energy. Yes, traditional banking requires energy, too, but not nearly as much per transaction/person.
"Not nearly as much" is quite an understatement.
The factor is something like 350,000x more energy required for a bitcoin transaction vs. a transaction on the traditional banking network.
Citation?
I didn't post it, but statista [1] says it's 741kWh for one bitcoin transaction vs. 149kWh for 100.000 visa transactions.
That's a factor of 741/149 * 100,000 â 497,000.
Of course visa is not the whole banking system, but it seems as it would be roughly comparable.
What I find horrific about this is that you can power your apartment for a year for the energy consumption of two bitcoin transactions.
[1]
https://www.statista.com/statistics/881541/bitcoin-energy-co...
It's an example of "arbitrary effort wasted for a bigger slice of a fixed size pie".
An equivalent would be advertising for the US election. If all parties cut their ad budgets by a factor of 10, the result would likely be the same. Yet they all "waste" their ad budgets on yard signs simply to get a bigger share of the vote, and they have to because their competitors do too.
I understand that, but this doesn't make it better. The max effort you put in is proportional too how much bitcoin is valued, so if more people use it and the value goes up, the energy requirements rise as well.
You honestly don't see one valuable use-case for bitcoin? And if serious mainstream investors start buying it as an inflation hedge, they are just idiots?
I think there are other mechanisms to accomplish most things that can (currently) be done with bitcoin. I think there's a good chance that will change at some point. Institutional investors are starting to take notice of crypto, but it doesn't appear to be a significant part of anyone's inflation hedge quite yet due to volatility and concerns of manipulation. Again, I think there's a good chance that will improve with time. But yes, for right now, I don't see an existing compelling use-case for crypto except in its future potential.
Is that a valuable use case? Just another instrument to try to use as a hedge?
That really doesn't seem like what Bitcoin or the community is all about.
Also bitcoin seems mighty volatile to be useful for hedging. I think bitcoin is a speculation tool and for buying illicit things.
You can't win arguing about crypto on HN. I list 50 use-cases, everyone says a centralized DB can do it better. I say the most crucial one - inflation hedge - and you say "What, that's it?" You can lead a horse to water, but you can't make it drink.
I didn't look through 50 use cases, but as far as the potential as a hedge ... that seems really ephemeral and like so many things, is a thing that is already a thing.
bitcoin as inflation hedge lmao
This is not an endorsement of the value of bitcoin, any more than it would be an endorsement of the value of beanie babies if such a collection was part of the assets seized.
All this means is the government is aware that bitcoins can be traded for real dollars. Its job when seizing assets is to simply perform that transaction.
They would do the same thing if they had found a truckload of Funko Pops, that's not the government recognizing anything besides the fact that they have market value.
I'm sure they'd also have processes to seize Beanie Babies or Pokemon cards, if they were currently trading for $15,000 per unit on eBay
Discussion from yesterday:
https://news.ycombinator.com/item?id=24990233
(This is not a dupe since the Bloomberg story has new information.)
Has anyone found any official information from the DOJ about this?
Nothing so far on
but a bit of google-fu turned up this link
https://www.courtlistener.com/recap/gov.uscourts.cand.368440...
(via
https://www.courtlistener.com/docket/18607888/united-states-...
)
> Claimants of the above-described property which is the subject of this action shall file their claims with [blah] [blah] [blah]
I wonder if claims like this ever go anywhere.
At least a couple blokes sent token amounts, as they state:
> Individuals will often send minimal amounts of Bitcoin to these addresses for unknown reasons. For example, on November 3, 2020, 1HQ3 received 0.00010999 bitcoin (approximately $1.51) from an unknown individual.
I think some people who lost money when Payza/Alertpay got seized were given a very nicely worded letter saying who to contact for their seized funds, but those calls/emails/etc never went anywhere. Almost made it sound like you could get your money back.
Here's that claim notice page:
https://www.justice.gov/usao-dc/victim-witness-assistance/ob...
and one case of a guy trying to get his money back for years:
https://www.reddit.com/r/legaladvice/comments/7p6v3w/funds_s...
> I have called, & emailed everyone multiple times, and get a response back once every 4 months from people who don't understand whats going on.
So the unknown wallet was actually the DoJ taking control?
I was wondering what they wanted the courts to do.
Iâm not sure after reading the article. Are they just planning on destroying the wallet key, kind of like if they just burned a billion in seized cash?
Itâs interesting to think about how to do this. It must be hard to keep an agent from recording the key, and using it 50 years later or something.
Theoretically as long as Bitcoin is around anyone who knows the private key can use those coins right? Is there a way to delete coins like a /dev/null address or something?
From the link I dug out in the above comment
"According to an investigation conducted by the Criminal Investigation Division of the Internal Revenue Service and the U.S. Attorneyâs Office for the Northern District of California, Individual X was the individual who moved the cryptocurrency from Silk Road. According to the investigation, Individual X was able to hack into Silk Road and gain unauthorized and illegal access to Silk Road and thereby steal the illicit cryptocurrency from Silk Road and move it into wallets that Individual X controlled. According to the investigation, Ulbricht became aware of Individual Xâs online identity and threatened Individual X for return of the cryptocurrency to Ulbricht. Individual X did not return the cryptocurrency but kept it and did not spend it.
On November 3, 2020, Individual X signed a Consent and Agreement to Forfeiture with the U.S. Attorneyâs Office, Northern District of California. In that agreement, Individual X, consented to the forfeiture of the Defendant Property to the United States government. On November 3, 2020, the United States took custody of the Defendant Property from 1HQ3."
I wonder: could 'Individual X' be DEA agent Carl Force (previously sentenced to prison), Secret Service agent Shaun Bridges (previously sentenced to prison), or some other government agent or informant who had tried to enrich themselves via the investigation?
More about Force & Bridges:
https://freeross.org/corruption/
Or perhaps Thomas Clark, who has his sentencing scheduled for December.
Sounds like they bought their way out of a prison sentence?
I wonder if any of the forfeiture got rebated back to them.
Maybe, the statute of limitations were up on the hacking and theft lf the bitcoins themselves, but they gave up the coins due to civil asset seizure
Any indication that Individual X was working for the government the whole time?
> Are they just planning on destroying the wallet key, kind of like if they just burned a billion in seized cash?
Why on earth would they do that? Under US law, law enforcement agencies can keep a portion of the proceeds from the sale of any goods they legally seize. This is a massive windfall for them.
Oddly enough, in the case of other "Anonymity-Enhanced Cryptocurrencies" ("AECs"), the DoJ has taken the position that they'd rather not recirculate them. See <
https://twitter.com/jerrybrito/status/1314254265251225600
>, where it's reported:
_> In most cases, the Department [of Justice] does not liquidate seized or forfeited AECs, as doing so allows them to re-enter the stream of commerce for potential future criminal use._
So note: if the DoJ auctions these off, it's "good for Bitcoin", as it provides further confirmation they consider them a normal form of property whose legal uses outweight any illegal uses.
On the other hand, if they refuse to auction them off, it's _also_ "good for Bitcoin", as it permanently reduces the circulating supply, making all other units incrementally more dear.
Yeah, let's burn these bad coins, thus reducing the supply and raising the net worth of everyone who invested in them. That'll really teach people for using Monero!
Asset inflation is less useful for currency.
Though it's unclear still what Bitcoin's principle role is. If it's more an asset, then yes, destroying coins is a benefit to current holders.
I'm sorry - but - HUH?
> re-enter the stream of commerce for potential future criminal use.
Because of course if CASH re-enters the steam of commerce is somehow different?
I agree it's batty reasoning!
For example, what if we assume for a moment that this makes sense from a crime-fighting perspective. That is, the marginal value of future-crime prevented by withholding the cryptocurrency is greater than the value of the crime-fighting that could be financed if it were auctioned off.
If true, it would also follow that the DoJ should be _buying_ cryptocurrency on the open market to keep it idle, at least until its price rises such that an equilibrium is reached, where "withhold-from-stream-of-commerce-value" and "spend-on-crime-fighting-value" become roughly equal.
Sounds like nice stash to fund Contras in some peaceful country.
In the past they have put it up for auction. [1]
You can send a transaction with a value and an output script of OP_RETURN (a bitcoin script instruction). These outputs are unspendable. [2]
[1]
https://www.usmarshals.gov/assets/2020/febbitcoinauction/
[2]
https://en.bitcoin.it/wiki/OP_RETURN
> Iâm not sure after reading the article. Are they just planning on destroying the wallet key, kind of like if they just burned a billion in seized cash?
If you wanted to burn the coins you would send them to the zero address as coins in the zero address are guaranteed to never be spendable.
The simple way to do it is to send the btc to an address for which the private key is unknown, thereby making it impossible to spend. Watch them not do this.
How would you verify that the private key is unknown? I guess an auditable process in a black box to confirm the key is ever stored. But with $1B at stake, thereâs some serious incentive to measure electrical output or something to snoop the key.
I guess you could send to a random address, but thereâs an infinitesimal chance that someone in the future generates a key with that address, right?
This address has no known private key
https://www.blockchain.com/btc/address/1BitcoinEaterAddressD...
Sure someone could randomly guess it but not likely. You don't need to have or know a private key to generate a valid checksum bitcoin address that can be sent to.
I just created several trillion âdisposalâ sounding addresses and started sharing the one that I guessed a private key for. Thereâll be some real surprises in 2025!
If you can generate the private key to a 27 character or longer English readable Bitcoin address then you can use the same magical technology you possess to earn far more than $1 billion USD.
Same question: Ok we may not be able to brute-force it today for less than $1bn, but tomorrow, may a vulnerability in the algorithm make it possible to regenerate the private key?
If there is ever such a vulnerability in bitcoin that allows you to either
- Generate private keys at a rate in which you will be able to produce it in a reasonable time
or
- Outright reverse engineer the private key from the public key or other metadata
Then Bitcoin is broken and that 1bn is worth next to nothing.
If someone discovers such a vulnerability and is able to cash out before it's publicized then they'll make a lot of money anyway.
They could also short Bitcoin before intentionally crashing it.
Keep in mind the receiving public key is not revealed when money is sent to an address, only its hash. So you'd have to "reverse" SHA256 first.
The Bloomberg story is
https://www.bloomberg.com/news/articles/2020-11-05/u-s-seeks...
.
(This comment was merged from
https://news.ycombinator.com/item?id=24999794
.)
TFA says the suit seeks to seize the $1B in coins after an unknown hacker gained access to the funds.
Forfeiture doesnât mean destroying the coins. If the Fed can gain access to the coins they will auction them off.
But if I understand correctly, this is the Fed basically laying a legal claim to and flagging coins that it doesnât control therefore making them much more difficult to redeem, after seeing that they moved, which implies a hacker did manage to crack a wallet.
This story is the perfect example for how little privacy is actually afforded by the Bitcoin blockchain.
Itâs unlikely the Fed has access to the coins, and thatâs why the Bitcoin price just went up 7% because whoever cracked the wallet certainly isnât going to hand over the coins.
Either those coins will never be spent, or the hacker will have to find a country willing to launder them and somehow keep the Fed at bay (doubt it), or if youâre the Fed maybe you arrange a settlement with the hacker to split the coins.
TFA says that the coins _were already seized_ by the U.S. government, not that they intend to do so.
With respect to the lawsuit, note that this is how civil forfeiture works: the "defendant" is the property seized. In almost all U.S. jurisdictions, a civil forfeiture lawsuit can't be filed until the prosecuting agency is actual in custodial possession of the property. The point of the lawsuit is to give the lawful owners of the property the opportunity to challenge the seizure and get their property back.
So weird, I think the article has been almost entirely rewritten since it was first posted...
The settlement would be an excellent idea. Big companies often make deals with governments over large amounts of tax they owe. If the hacker can walk with $50M clean and legal (and let the government have the rest), it's a pretty sweet deal.
The Silk Road may not have been their only hack either. The $1b may not be that big of a deal for them. Dunno what kind of immunity they would have received, but individual X must be happy that the US Gov got put their biggest enemy away for life.
Bitcoin really missed the mark with respect to privacy and fungibility. I bet this guy wishes they were holding something like Monero now!
Very curious how they convinced this anonymous hacker to give up $1B to the federal government. The filing makes it sound like it was voluntary, but I doubt it really was.
"We can charge you with these crimes or you can give up the wallet. Ah, you don't want to go jail? Thank you for your cooperation."
What I find most interesting is that anybody else in America that had $1B to their name - dirty or otherwise - would have almost zero probability of going to prison in the short-to-medium-term, and would therefore never actually hand over the cash. Very, very good lawyers are quite affordable at that point. It's hard to imagine someone with $1B in drug money, for example, just handing it over to the feds.
A very quick search for "largest cash seizures" shows a couple in the $200-300M range. In both cases, the authorities found and seized the physical cash. I don't see any precedent for someone handing it over.
I wonder what made this situation so different. Is it the illiquidity of Bitcoin at that scale? Or did Hacker X just not retain a lawyer/know what to do?
Pretty much anyone who has $1B has a vast amount of institutional power too. They own the means of production, or they have deep connections in business and government. Those are the things that keep you out of jail.
Having a BTC wallet is one of the only ways to have a billion dollars and zero institutional power, so the money is little help here. The US government is also heavily incentivized to come down hard on these sorts of people because theyâre threatening the dominance of the US dollar.
The wallet was completely illiquid. No market would accept coins that were linked to it. You could exchange small amounts(like thousands of dollars at most probably) with in person transactions but then the government would know where you were when they track down the person you sold to. And they really want those billion dollars. Plus there's a non zero chance that the person on the other side of the in person transaction is law enforcement.
Vincente Zambada was charged with trafficking more than a billion dollars' worth of cocaine and heroin. In a 2013 plea bargain deal which was made public by a U.S. District Court in 2014, Zambada admitted coordinating smuggling tons of cocaine and heroin with "El Chapo," JoaquĂn GuzmĂĄn Loera, and agreed to forfeit assets of $1.37 billion to the US government. The plea bargain resulted in a fine of $4 million and 15 years in prison. He is considered a top potential witness against "El Chapo
What do you even do with that much bitcoin realistically? It's dirty, so any attempt to turn it into fiat puts you at risk of being found. Whoever had it refused to touch it for 7 years, likely because they knew it was a fast-track to getting arrested.
Giving that money straight to the feds in exchange for immunity might be more attractive than trying to hide the reason you became a billionaire.
Pretty crazy to think about. Its a _billion_ dollars. For that much money, it might almost be worth it to go to jail for it and let your kids try to launder it 50 years later. There are bound to arise opportunities to launder at least part of it right? Even without considering that the bitcoins might become even more valuable, you could set up a dynasty with this money.
It was 70k illiquid Bitcoin. The dollar value was entirely virtual.
What strikes me about these people is how they can't stop and cash out. They risk to lose their life to jail yet don't have an exit plan. They just continue gambling.
Or you can just ask the feds to keep you in a witness protection program which treats you and your family like royalty for 50 years. I don't know if it exists, but it might.
The USA government can easily launder 1 G$ in bitcoin and give you part of the profits; it's not clear who else could. The only alternative I can imagine is some giant money laundering scheme with some authoritarian state, probably involving the smuggling of oil, diamonds and/or weapons.
whoever had it didn't have a "Marty Byrd" type person to launder the money. such a shame, could have done so much with that money in terms of humanitarian aspects.
Alternative story: NSA cracked the wallet's password and FBI invented Individual X as a cover story.
Those supercomputers must be good for something...
What is usually the practice for seized money? Donated to charity? Invested in government bonds? New uniforms?
âTV for breakroom remodelâ
https://www.thegazette.com/data/police-forfeitures#route-IC
Seized bitcoins are sold at auction. It's been done several times before.
Many bitcoin wallets have passwords. In situations where ownership is unclear (eg wallet in sharehouse with access by anyone living there; but protected by password), being forced to divulge your password could have 5A issues.
So what is the actual story here? Some dormant coins that were associated with the Silk Road for which no ownership was established and nobody was prosecuted for has moved to a new address and the feds are laying claim to the coins? And what actual information is there to suggest they were hacked?
Wow, so its movement on election night happened to be a coincidence? (Dunno why DoJ would want to hide this from the public). If anything, every coiner was on their computer and more likely to be seeing something like this.
What happens if the feds memory hole the keys for this wallet effectively destroying the bitcoin? Its just gone forever right? This seems like the best route for the state to supress and destabilize cryptocurrencies. Heck, if the federal gov't were motivated enough they could 'print' money at the Fed, use it to buy bitcoin, and then destroy it! No skin of their backs.
That'd probably make the price of bitcoin to go up but if they would do that they probably could get sued?
Why would anyone hold such large sum in large wallet and wouldn't rotate it. Seems careless.
There's no value in rotating them. Wallet keys are essentially random. Keeping it in one wallet doesn't increase the chance of the key being discovered.
That's a lot of assumptions about your vault security, random number generator and whether it wasn't leaked somewhere before.
Well at least they have a reserve of bitcoin to pay off ransomware demands for a while :-)
Less sarcastically, I feel for "Individual X", I mean here you've gone and managed to gain control over a billion dollars, and you have no way to 'spend' it without revealing that you have it.
TL;DR: The wallet held the proceeds of "Silk Road" drug trafficking, a hacker stole the wallet. Feds tracked down the hacker and just made a deal with him to give them keys to the $1B wallet.
Hacker prob got a nice pen and stayed out of Federal prison.
> and stayed out of Federal prison.
I'm a little confused there, because both the hacking and money laundering should have been beyond the statute of limitations.
Generally, the statute for civil forfeiture is five years. Because the Bitcoin was illegally acquired (through hacking) in 2015, the statute would have expired this year, even though the underlying crime (hacking) only has a 2 year SOL.
According to the filing, the last transaction involved in the hack was in November 2015, so the statute probably would have expired this month.
If I had to guess it's probably because those transactions originally come from the Silk Road.
So while the hacking and money laundering aren't criminally liable, the coins themselves are proceeds from a criminal enterprise, and if you stand in the way of the government trying to get them you could be hit with obstruction(?).
Realistically regardless of the technical level of criminality I doubt that the FBI would let a billionaire be minted with DNM money.
Right, but if they had nothing else on Person X, I'm a little surprised that they were able to get these coins from them-- to forfeit the assets they'd have to get possession of them.
Because all they could have traded (assuming there were no other viable criminal charges) would be keeping their identity secret.
This is bad
How does the government seize Bitcoin?
So what happens to bitcoins which were seized by the US government?
They typically get auctioned off, much like other property seized in asset forfeiture proceedings.
That's an interesting angle in the "is Bitcoin really a currency or is it just property?" argument. What would happen if the US government seized a billion dollars worth of foreign cash?
Would that get auctioned off too? Seems like a weird auction, selling money.
It's a security.
Securities are traded like currency because the security represents a proof of ownership.
https://en.wikipedia.org/wiki/Foreign_exchange_market
Why go through the trouble? Count it as "revenue" and destroy it.
If the govt wants 1B in cash there are easier ways to get it.
Barr gives them to Trump to help pay off some of his debts before he flees the country
WEREN't That FBI guy who brought cocaĂŻne soap to silk road's webmaster who stole bitcoin but got caugh... :Ă
Was those bitcoins the one they stole and then put back in the wallet to respect their own law?... :D
Gov took his money and sentenced the guy to double life sentence...
an awful story...
Seems like HN might be blocked as referrer here... clicked on the link and got a 404. If I go to the link directly it loads.
Try an extension like Smart Referer to prevent this kind of tracking.
https://addons.mozilla.org/en-US/firefox/addon/smart-referer...
Unlucky, probably, because it works for me.
Whoops. Ditch it and nuke the drives. Works for me.
Downvotes on this comment are probably missing the point (as I see it), which is that redirect/browser/other HTTP hijacking malware is pretty common and could cause something weird like this.
Works for me
Change your gateway from 1.1.1.1 to 8.8.8.8 and see if it makes a difference
First, 1.1.1.1 and 8.8.8.8 are DNS servers, not gateways. Second, changing DNS server doesn't really work against a 404.
It might, because it might be not the entity you expect that gives you 404.
Even if not for wrong DNS resolution, it might be the load balancer that points you to server who doesn't have the resource somehow.
I find it implausible that someone went through the trouble of stealing $1B from an online marketplace for drugs, then sat on it for 8 years without spending _any_ of it, and then forfeited it to the U.S. government.
As always in situations like this you shouldn't focus on the face value but the potential value post-laundering of what he could potentially end up with. It's not like he had $1B in the bank he could spend as soon as he got out of jail. Moving even a small fraction of this amount to buy something significant is bound to have people asking questions you don't want to answer.
Prison makes doing a lot of things extremely inconvenient, and greatly increases your preference to do things that your jailers would like you do.
What's fascinating is that it is the view of the state that the creation of a hard fork, which is the creation of new and previously non-existing coins according to how Bitcoin is taxed by the IRS, is considered to be the proceeds of crime. It is philosophically notable that a piece of property can come into existence and immediately be considered the proceeds of crime in this way.
Don't think of it from the point of view of "creation" of property. Think of it as an investment: The investment grew, that's all. Imagine an asset seizure that overlooked 1,000 shares of Apple stock. It was then found some years later, but the stock had split so there was now 2,000 shares. That isn't new property, is rose out of the original forfeited asset. This is no different.
The Bitcoin Cash coins were received solely as a result of owning coins that were the proceeds of a crime, therefore, the BC coins were themselves also deemed the proceeds of a crime.
Under US forfeiture laws proceeds is defined as the following:
(A) In cases involving illegal goods, illegal services, unlawful activities, and telemarketing and health care fraud schemes, the term âproceedsâ means property of any kind obtained directly or indirectly, as the result of the commission of the offense giving rise to forfeiture, and any property traceable thereto, and is not limited to the net gain or profit realized from the offense.
I suppose the BTC itself would be covered under "property of any kind obtained directly or indirectly, as the result of the commission of the offense giving rise to forfeiture"
And the BCH split coins would fall under "and any property traceable thereto, and is not limited to the net gain or profit realized from the offense."
It would appear that such a seizure is legit as 'traceable' is infinitely flexible. But I'm not a lawyer so don't take my word for it.
Yes, that's generally how the tracing works.
In one extreme case (at the state level), prosecutor successfully seized the house of the parent of a defendant, where the defendant had made one gift mortgage payment on behalf of their parents, who had timely paid the mortgage for several years and were not at any risk of being unable to pay their mortgage.
And with a total lack of fungibility things could get even crazier with crypto. Imagine losing your house because you cashed out some BTC you got off of some guy you don't know for cash that Chainalysis says is linked to the Silk Road five transactions back so it is the proceeds of crime.
Normally, traceability doesn't extend that far (since generally unless you're the government you don't have the ability to determine the provenance of cash) but with blockchains, you _can_ know if the money you receive is tainted, so it's possible that some jurisdictions might extend tracing to completely innocent parties.