In 2020, the US Government used its Federal Forfeiture powers to seize $3 billion in Bitcoin from the private wallet of a hacker. The seizure consisted of 69,370 bitcoins.
In a surprising turn of events, Silk Road founder Ross Ulbricht — who is serving life in prison for his role in creating and operating the early Dark Web site Silk Road where drugs, weapons, and just about anything else was sold — agreed to forego any claims to the $3 billion in seized Bitcoin. In exchange the $183 million Ulbricht owes in restitution for the criminal proceeds he made from Silk Road.
Ross Ulbricht, a/k/a “Dread Pirate Roberts,” a/k/a “DPR” is a brilliant computer scientist. As a young man, he used his genius to create what was, for many years, an untraceable and impenetrable internet-based criminal enterprise known as the Silk Road.
Ulbricht took a percentage of everything sold on Silk Road. However, users paid his commission paid in Bitcoin. Silk Road was an early criminal banking exchange that used anonymous cryptocurrency transaction to evade global law enforcement authorities.
Ulbricht got a good deal here inasmuch as he did not have to admit he owned the seized crypto wallet. This allowed him to avoid felony tax evasion charges.
The way US law works is that all income, legal or illegal, is treated as taxable income. In order to increase criminal charges against bad actors, the US government can charge them with their criminal acts; seize the cash proceeds of their crimes; seize the cars, boats, planes, homes, and anything else the bad actors purchased with criminal income; and the government can and also charge them for income tax evasion for the failure to declare criminal income and pay taxes on it.
At present, the US is using its all-powerful Forfeiture laws to seize the US-based assets of Russian Oligarchs connected to the war criminal Vladimir Putin.
- The Silk Road was an online black market where buyers and sellers of illegal or unethical items could transact anonymously.
- Utilizing privacy techniques such as the Tor network and cryptocurrency transactions, people were able to transact in drugs, hacked passwords, illegal data, and other contraband.
- The FBI shut down Silk Road in 2013 and its founder Ross Ulbricht was sentenced to prison for life.
The FBI’s 2015 Press Release on the conviction of Ross Ulbricht describes the size and global scope of Silk Road. Ulbricht was a very elusive target and it required the extensive cooperation of Western law enforcement agencies to track him down:Ross Ulbricht, the Creator and Owner of the Silk Road Website, Found Guilty in Manhattan Federal Court on All Counts — FBI