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Ulbricht Admits Seized Bitcoins Are His and Wants Them Back

Unknown Lamer posted about 9 months ago | from the good-luck-with-that dept.

Bitcoin 243

An anonymous reader writes with the latest news about the aftermath of the Silk Road shutdown "From the article: 'Ulbricht ... said in a notarised December 11 statement that he believes the virtual currency should be returned to him because Bitcoins are "not subject to seizure" by federal law. Ulbricht, 29, now admits the Bitcoin fortune is his — even though he's previously denied any wrongdoing regarding Silk Road and claimed through his lawyer that the feds arrested the wrong guy.' So not only has he now confirmed his link to the site, and confirmed the money is his, but also means that a few precedents will be set. Is it seizable? Is it just 'copying data?'" Relatedly, three alleged moderators of Silk Road were indicted on Friday.

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Yeah.... (5, Funny)

P-niiice (1703362) | about 9 months ago | (#45774645)

I'm pretty sure I would have kept my mouth shut. The worst thing you can do is make it easier for the feds. But who knows, I've never been arrested on those charges and had a shitton of bitcoins seized.

The master owns everything, including your *LIFE* (0, Flamebait)

Taco Cowboy (5327) | about 9 months ago | (#45774697)

... he believes the virtual currency should be returned to him because Bitcoins are "not subject to seizure" by federal law.

See the bolded part ?

That Ulbricht still doesn't get it, does him ?

The master, aka the government, obeys NO law.

If they can ignore the highest law of the land, the Constitution just like that, what makes you think that they will follow mere "federal laws" ?

And they not only can seize your bitcoin, they can also take away your *LIFE*, if they want to.

Before you guys telling me that the government doesn't have the right to kill you, please look back to the incident that took place in Waco, Texas, USA, back in 1993.

They burn children to death.

Yes, *CHILDREN* and till today, 20 years later, *NOBODY WAS PUNISHED* for the death of those children, all of whom happened to be American Citizens.

Re:The master owns everything, including your *LIF (3, Insightful)

DaveV1.0 (203135) | about 9 months ago | (#45774789)

he believes the virtual currency should be returned to him because Bitcoins are "not subject to seizure" by federal law.

See the bolded part?
Both you and Ulbricht don't get it. What you believe has no bearing on reality.

Ulbricht isn't claiming that the government violated the constitution. He is claiming Bitcoins aren't property and thus can't be seized under federal law. That is for a judge to decide, but lawyers don't think he will prevail because intangible property is still property and federal law allows for the seizure property that are the products, or purchased with the products, of federal criminal acts.

Unless you were at Waco, you don't know what happened at Waco.

Re:The master owns everything, including your *LIF (1)

Lumpy (12016) | about 9 months ago | (#45774887)

The Government can do what it pleases. The Law does not apply to the police, FBI, Feds, etc...
He has ZERO chance of getting anything back.

I know people that had servers illegally seized in a data center raid, they were scooped up with everything else, they did not get anything back bot a box of parts that were not even theirs.

Re:The master owns everything, including your *LIF (1)

Anonymous Coward | about 9 months ago | (#45775057)

He has ZERO chance of getting anything back.

Yes, because his argument is crap and has no actual case/statutory law to back it up. He simply thinks he's going to "baffle" the "normy" judge with his arrogant nerd argument.

Re:The master owns everything, including your *LIF (1)

Creepy (93888) | about 9 months ago | (#45775697)

Since it's a financial crime, I would expect the Secret Service to be handling it and hold the property. The FBI does the investigation but not the arrest and seizure of property. Source - I knew this guy [textfiles.com] , who got busted by them for piracy (albeit not well - friend of a friend kind of knew him).

Re:The master owns everything, including your *LIF (4, Funny)

Bob_Who (926234) | about 9 months ago | (#45774913)

Unless you were at Waco, you don't know what happened at Waco.

You mean what happens in Waco stays in Waco?

Re:The master owns everything, including your *LIF (4, Insightful)

Jherek Carnelian (831679) | about 9 months ago | (#45775297)

Unless you were at Waco, you don't know what happened at Waco.

Bullshit. Even the US government doesn't deny that children were burned to death. They do deny their culpability, but it isn't terribly hard to see that as misdirection.

Even if the footage (which I watched on live TV at the time) of the tank pushing in the walls and the fire starting not to long afterwards was misleading, the government were the ones with all the resources and time necessary to handle the situation in a safer way. They decided that their time was worth more than the risk to the children and that's the best possible light you can put on the government's actions, all other interpretations are much less favorable.

Re:The master owns everything, including your *LIF (1)

Joce640k (829181) | about 9 months ago | (#45775413)

He is claiming Bitcoins aren't property and thus can't be seized under federal law.

If they're not "property" then they can't belong to anybody, ie. him.

Re:The master owns everything, including your *LIF (3, Insightful)

Anonymous Coward | about 9 months ago | (#45774791)

I can bold random words too. It makes my stuff much more important.

There is no federal law that makes it illegal to seize bitcoins. It is an asset just like any other. The fact that it is electronic has nothing to do with it at all

Re:The master owns everything, including your *LIF (1)

kelemvor4 (1980226) | about 9 months ago | (#45775089)

I can bold random words too. It makes my stuff much more important.

There is no federal law that makes it illegal to seize bitcoins. It is an asset just like any other. The fact that it is electronic has nothing to do with it at all

To people who don't want their assets seized it does. On the other hand, some people enjoy a seized asset.

(New) Mount Carmel Center, if you will... (2)

rmdingler (1955220) | about 9 months ago | (#45774821)

please look back to the incident that took place in Waco, Texas, USA, back in 1993.

They burn children to death.

As the folks from Waco never tire of telling you, it really didn't happen there.

Re:(New) Mount Carmel Center, if you will... (0)

Lumpy (12016) | about 9 months ago | (#45774911)

It happened on the set they used to fake the moon landing then?

Where does the Feds stage their disregard for the law?

In Amerika (-1)

Anonymous Coward | about 9 months ago | (#45775013)

the US Government does not recognize the Constitution of the United States of America. According to former President George Walker Bush the paper on which it is written is worthless. All hail the Republic and bow before its greatness.

Re:(New) Mount Carmel Center, if you will... (2)

BrokenHalo (565198) | about 9 months ago | (#45774937)

There seems to be a rash of similar posts re Waco in other threads too, and I suspect that the failure to post as AC here was inadvertent. Having a low UID doesn't excuse being a troll.

Re:The master owns everything, including your *LIF (5, Insightful)

Noryungi (70322) | about 9 months ago | (#45774891)

Yeah, let's tone down the hysteria a notch now, shall we?

Mr Ulbricht admitted to committing a crime, by facilitating the buying and selling of drugs on the Internet. Wrong move, but let us set this aside for a moment.

Bitcoins can be considered (and, indeed, are presented everywhere) as a currency. Hence, they can be considered as an ill-gotten gain.

While I am not a lawyer, I am pretty much certain that every country under the sun has got a law in its books that says, essentially: "Thou shall not profit from illegal activities" or some such.

This is prefectly constitutional, it respects the 4th amendment of the Constitution of the USA, and I am pretty sure it has been challenged many times in front of the Supreme Court, and upheld every time.

Since Bitcoin is a currency, and that said currency has been obtained from an illegal activity, it represents a profit from an illegal activity, and, therefore, can be and should be seized by the Federal Bureau of Investigations, a branch of the Department of Justice of the Government of the United States of America. The same thing would happen if, say, he had been paid in Euros or Yens (or any other currency, really) instead of Bitcoins.

If Mr Ulbricht is cleared of all charges - good luck with that since he pretty much admitted committing or facilitating an illegal activity - then, of course, the Bitcoins he has stashed should be returned to him by the FBI, probably with a little note attached saying: "Sorry! Here is your crypto currency" (again, good luck with that).

Should drug selling and buying be considered legal? Why not, you may have some arguments for the legalisation of drugs (See: Marijuana, legal use of), but, in the mean-time, it remains an illegal activity.

Hence, I believe Mr Ulbricht (a) will never see ''his'' Bitcoins again, (b) is about to learn a thing or two about the US legal process and (c) spend quite a number of years in a Federal Correctional Facility (or Prison). Whis is as it should be, since the guy comes off as a complete amateur.

And, while I agree that the ATF has badly bungled the whole Waco fiasco, I have zero compassion for religious nuts.

Re:The master owns everything, including your *LIF (2, Informative)

mrbester (200927) | about 9 months ago | (#45775077)

Big assumption: BitCoin is a currency. If it is then it is confiscated as proceeds of illegal acts. If it isn't then it is an asset, just like converting dollars into works of art, shares, et alia and is *not* confiscated except as means of paying fines. They can't have it both ways.

That BitCoin is "presented" as a currency is immaterial (pun intended) as it can also be "presented" as barter.

Re:The master owns everything, including your *LIF (5, Informative)

rgmoore (133276) | about 9 months ago | (#45775441)

Except that ill-gotten gains are always subject to seizure. Look up US Federal drug forfeiture laws some time. The feds can take anything that's the proceed of or used to facilitate drug crimes. It doesn't matter what form the assets are in. If the feds can prove they were bought with drug money, they can seize them. If they were used as an active part of the trade, the feds can seize them. Since the bitcoins appear to be both, it's going to be pretty easy for the feds to get them.

Re:The master owns everything, including your *LIF (1)

fatphil (181876) | about 9 months ago | (#45775477)

As far as I understand it (not a yank) the principles behind civil forfeiture mean that assets are fair game, so the authorities are not forced to walk both sides of the is-a-currency line.

However, you're certainly right that Dollars are bartered with, as they are not the currency everywhere where they're actually in use. I know I've bartered a mixed bag of different paper not-currencies-here when I had problems with plastic when travelling.

Re:The master owns everything, including your *LIF (1)

Noryungi (70322) | about 9 months ago | (#45775519)

OK, fine, Bitcoins are an asset. But, you admit it yourself, assets can be seized.

And, in the case of a criminal proceeding, assets will be seized because you are not allowed to profit from an illegal activity.

Hence, the distinction between currencies and assets is moot: they will be seized, because they both were acquired through aiding or engaging in an illegal activity.

Re:The master owns everything, including your *LIF (0)

Anonymous Coward | about 9 months ago | (#45775115)

Should drug selling and buying be considered legal? Why not, you may have some arguments for the legalisation of drugs (See: Marijuana, legal use of), but, in the mean-time, it remains an illegal activity.

Hence, I believe Mr Ulbricht (a) will never see ''his'' Bitcoins again, (b) is about to learn a thing or two about the US legal process and (c) spend quite a number of years in a Federal Correctional Facility (or Prison). Whis is as it should be, since the guy comes off as a complete amateur.

You had a point at the first bolded part, but then you had to go and ruin it with the second. "He deserves what will happen to him because he is an amateur." That's almost like saying we should find someone guilty of something that is not a crime, just because that person is scum.

Re:The master owns everything, including your *LIF (1)

Noryungi (70322) | about 9 months ago | (#45775491)

Here are some wise words from legal experts: when dealing with the police, just keep your mouth shut.

Let me say this again: Keep. Your. Mouth. Shut.

And whatever you do, do not admit, in front of cops, that your bitcoins came from an illegal activity. I expect better than that from Dread Pirate Robert!

Nay, I DEMAND better legal knowledge from the Dread Pirate Robert! Shoot, man, the right to remain silent is a part of the freaking US Constitution!! Fifth Amendment and all that.

Here is a guy whou KNEW he was engaged in illegal activity, and yet whines to everyone something like: ''gnya gnya gnya, these are my bitcoins and you can't seize them!!''. Yeah, right. Total amateur. Any more stupider, and he would be eligible for a Darwin Award.

Re:The master owns everything, including your *LIF (1, Offtopic)

anagama (611277) | about 9 months ago | (#45775331)

And, while I agree that the ATF has badly bungled the whole Waco fiasco, I have zero compassion for religious nuts.

I'm an atheist and I shake my head at the incredulity of religious belief. But being a religious nut should not rule out people from being treated with compassion, even if only out of sense of enlightened self-interest.

The Feds killed a bunch of innocent people at Waco, including kids. The direct blowback from this was Timothy McVeigh who had no qualms blowing up a building including a day care center under the notion that anyone who worked for the Federal Government, including their families, was complicit in the Waco atrocity/debacle/fuckup/whatever. And while I'm also intentionally child-free, and particularly immune from "think of the children" arguments, the bombing of the Murrah Building should give both sides reason to think that there are consequences for being vicious thugs, because some people take kids pretty seriously, and that has repercussions.

I feel bad for the people who died at Waco at the hand of an overbearing government agency, for those who died in the Murrah Building bombing at the hands of some vengeful idiots, and for those vengeful idiots who were executed as a result their misplaced sense of justified retribution. All of the people caught in the crossfire died tragically, and all that death and destruction could have been easily avoided if the government hadn't been so arrogant and if the Murrah Building bombers hadn't likewise been so arrogant. And that starts with treating people as something more than meat to slaughter, even if they are religious.

Re:The master owns everything, including your *LIF (0)

Anonymous Coward | about 9 months ago | (#45775443)

He should be in jail because he's an amateur? Or because drugs are bad m'kay?

Re:The master owns everything, including your *LIF (0)

Anonymous Coward | about 9 months ago | (#45775651)

>Bitcoins can be considered (and, indeed, are presented everywhere) as a currency
Nope. Not a currency by any meaningful definition of the word. But they *are* an asset. Just like a stock or a boat.

Re:The master owns everything, including your *LIF (0)

Anonymous Coward | about 9 months ago | (#45775759)

"Since Bitcoin is a currency...". Is it really? This is the whole point of the article! Of couse if you just assume this, then there is nothing more to discuss! Ulbricht is claiming that, technically, bitcoins are not a currency under US law. As far as I know, he is correct, and the current forces that be do not want to legitimise bitcoin by making it a currency, so he wants to exploit this loophole. In some places bitcoin is considered an asset, and I think in the US it is taxable (but not everywhere, e.g. Germany I think), but it is not recognized as currency. If bitcoin were a real currency, then this would have very important legal implications. For example, the US constitution makes it illegal to use alternative currencies in the US. So far the authorities have refused to decide the legal status of bitcoin, this could force them to do so, which is probably a good thing, depending on what they decide.

The master owns everything, including your *LIFE* (0)

Anonymous Coward | about 9 months ago | (#45775645)

No need to go back to 1993. Look at the 2011 execution style murder of Oscar Grant by BART police officer Johannes Mehserle. The murderer's defense was paid for with taxpayer dollars and in the end he only served one year in jail.

Re:Yeah.... (0)

Anonymous Coward | about 9 months ago | (#45774865)

The guy is a crackhead, what did you think he was going to do, something intelligent?

Re:Yeah.... Don't worry... (2)

Bob_Who (926234) | about 9 months ago | (#45774879)

He'll virtually be sentenced to bit-jail.

Re:Yeah.... Don't worry... (0)

Anonymous Coward | about 9 months ago | (#45775869)

Yes, and the term of his sentence will fluctuate wildly too.

Just copying data? (1)

rvw (755107) | about 9 months ago | (#45774647)

When one song is put online for illegal download, it's potentially worth $700k, still a lot more than one bitcoin, so I guess this is not "just copying".

Re:Just copying data? (2)

aliquis (678370) | about 9 months ago | (#45774759)

So the government should pay for all potential copies of his money! ;D

Re:Just copying data? (1)

gizmo2199 (458329) | about 9 months ago | (#45775201)

Speaking of bitcoin, Krugman said "Bitcoin... is by design, a kind of virtual gold. And like gold, it can be mined: you can create new bitcoins, but only by solving very complex mathematical problems that require both a lot of computing power and a lot of electricity to run the computers. Hence the location in Iceland, which has cheap electricity from hydropower and an abundance of cold air to cool those furiously churning machines. Even so, a lot of real resources are being used to create virtual objects with no clear use."
In other words bitcoin mining is actually wasting electricity and adding to the carbon footprint, but not really adding value to anything. The object itself is entirely fictional and speculative. At least gold can be made into jewelry or used in electronics, what can you use bitcoin for, other than speculating on it's price?
And what I find ironic is that 200 years ago, there was no Federal Reserve, and any bank could print their own money. Yet somehow people opted to use the currency backed by the US govt. So in a sense we are mining our way back to the 17th century.

Re: Just copying data? (0)

Anonymous Coward | about 9 months ago | (#45775381)

Yeah, and banknotes can be used to do what? Wipe some asses?

Good luck with that... (0)

Anonymous Coward | about 9 months ago | (#45774649)

I think Megaupload and Co. are still waiting...

Arrogance (5, Insightful)

anagama (611277) | about 9 months ago | (#45774655)

The foolish arrogance of geeks is sometimes astounding.

Re:Arrogance (4, Interesting)

gbjbaanb (229885) | about 9 months ago | (#45774753)

indeed.

I say - give him his bitcoins back, with a wimpy apology. And then refuse to allow him access to computers whilst he's in prison because of the computer-network related offences he just admitted to.

And then imprison him more for evading taxes on his bitcoin income.

Re:Arrogance (2)

onyxruby (118189) | about 9 months ago | (#45775447)

That's the rub, in claiming them he has admitted a massive tax fraud that could put him behind bars in prison for just as many years. Since the bitcoins are a product of tax fraud they could be seized on that basis alone. They won't give the bitcoins back though, because he could turn them over to third parties and use them to do things like put out hits on witnesses - the thing that they shut down his operation for in the first place.

Remember it was taxes that did Al Capone in, everything else he had a handle on, he just couldn't prove how he got his money through any means that was honest.

Shirley, Dread has a Brobdingnagian Defense Fund (1)

rmdingler (1955220) | about 9 months ago | (#45774787)

While I'd like to argue this could be a legal tactic suggested by a sentient attorney, your comment smacks of truth.

There is a better probability my brother-in-law will leave Jennifer Anniston beneath the Christmas tree for me tomorrow than the Feds returning this seizure.

Re:Arrogance (0)

Anonymous Coward | about 9 months ago | (#45775189)

Agreed. Continually being told by parts of society that they are the smartest person in the room is backfiring.

Re:Arrogance (1)

medv4380 (1604309) | about 9 months ago | (#45775863)

What do you expect when hubris is considered a virtue?

Better proposal. (1)

SuricouRaven (1897204) | about 9 months ago | (#45774669)

Give them all to me!

In all seriousness, I imagine the bitcoins are currently in a state of limbo - if the government were to spend them it could legitimise the new currency, something that would make a lot of officials uncomfortable. Most likely the wallet will be retained until the case is done and whatever legally mantained retention of evidence is passed, then just deleted, effectively removing the coins from circulation forever.

Re:Better proposal. (2)

jythie (914043) | about 9 months ago | (#45774681)

That does raise an interesting question.... seized assets are usually auctioned off, so what will become of this particular one? Are they even in a spendable form or is the wallet encrypted? If it is encrypted, can they force him to turn over they keys?

Re:Better proposal. (1)

rmdingler (1955220) | about 9 months ago | (#45774725)

If it is encrypted, can they force him to turn over they keys?

Sure they can. Wash Post [washingtonpost.com]

This time the interrogator will be, surprise, another cop!

Re:Better proposal. (2)

jonbryce (703250) | about 9 months ago | (#45774749)

Seized assets that are legal to hold are auctioned off, things like cars and houses. Seized assets that are not legal to hold, such as inventory of drugs, are destroyed.

Re:Better proposal. (1)

SuricouRaven (1897204) | about 9 months ago | (#45774847)

Do bitcoins qualify as 'assets?' While economically things are worth whatever people will pay, politically even selling them for cash could be problematic.

Re:Better proposal. (2)

jonbryce (703250) | about 9 months ago | (#45774971)

Yes they qualify as assets. They're certainly not liabilities.

When the Feds bust a drug dealer, they might find an expensive car, and a large stash of heroin. They are certainly OK to auction the car, and certainly not OK to auction the heroin. Bitcoins falls in the middle somewhere. We don't know yet whether it is OK to auction them off.

Re:Better proposal. (1)

necro81 (917438) | about 9 months ago | (#45775425)

When the Feds bust a drug dealer, they might find an expensive car, and a large stash of heroin. They are certainly OK to auction the car, and certainly not OK to auction the heroin. Bitcoins falls in the middle somewhere. We don't know yet whether it is OK to auction them off.

Heroin and other drugs have (street) value, and perhaps the government could get a pretty penny by selling them. The reason the government doesn't, moral issues aside, is because it's illegal to sell or even posses them, so there's no legal way to offload them. Letting them sit around in a storehouse forever is a liability, so they destroy them.

There are some seized assets that are, more or less, legal to sell and possess, but cumbersome to do so. For instance, a stash of prescription drugs that someone was trafficking. Sure, the government could try to sell or auction them, but that raises all manner of thorny questions about traceability, purity, and running afoul of the FDA. Nope, it's easier (and ultimately cheaper) to just dispose of them. Bitcoin is much more clear cut; it is not illegal to possess or sell, and is easy to offload. It has value out on the open market, just like a bar of gold or that drug dealer's expensive car. I think that, after everything's been litigated, they'll sell the stuff off at market value.

Re:Better proposal. (1)

jonbryce (703250) | about 9 months ago | (#45775547)

I agree that it is not illegal to possess bitcoin, however I am less certain that it is legal to sell them.

For example, it is perfectly legal to possess a 401(k) pension plan, but unless you are appropriately authorised by the relevant authorities, you can't sell them. I suspect it is the same for bitcoins, except that it probably isn't possible to get the appropriate authorisations to sell them at the moment.

Re:Better proposal. (1)

Desler (1608317) | about 9 months ago | (#45775143)

Of course they do.

Re:Better proposal. (1)

mlts (1038732) | about 9 months ago | (#45775347)

What I wonder about is if the Feds have just the wallet, or access to the coins inside? This is similar to having a PGP encrypted file, versus the file and its decryption key.

With just the wallet, the coins are pretty much taken out of the BitCoin ecosystem. With the wallet + access to spend coins, the coins can be considered usable assets for auction or spending.

Re:Better proposal. (2)

jonbryce (703250) | about 9 months ago | (#45775827)

For the bitcoins deposited by customers on the Silk Road website, they have access to the coins inside, and they transferred them to their own wallet. For DPR's personal stash of bitcoins, they only have access to the wallet.

Re:Better proposal. (1)

DaveV1.0 (203135) | about 9 months ago | (#45774803)

Moneys are not auctioned off. They are converted into U.S. dollars and added to various budgets.

Re:Better proposal. (1)

fulldecent (598482) | about 9 months ago | (#45775029)

They are spendable. They were spent (transferred) to the FBI.

Argument? (1)

jythie (914043) | about 9 months ago | (#45774689)

So the piece describes it as an edgy argument, but what is his actual claim? Does anywhere go over why he believes BTC is not subject to seizure? Or is he just doing another variant of 'theft by government!' rant?

Re:Argument? (0)

DaveV1.0 (203135) | about 9 months ago | (#45774795)

His basic argument is that BTC are not property because they are intangible, and thus no subject to seizure under federal law.

Re:Argument? (1)

Nidi62 (1525137) | about 9 months ago | (#45774869)

But the harddrive (or whatever storage medium he used) his wallet is stored on is tangible. They can hold it, and anything on it, as evidence until the case is tried, and probably much longer depending on appeals.

Re:Argument? (1)

DaveV1.0 (203135) | about 9 months ago | (#45774939)

Intangible property is still property, it is even taxed. So, his argument won't work.

Re:Argument? (1)

jythie (914043) | about 9 months ago | (#45775039)

That was why I was curious if there was more to his argument. Simply saying 'they are intangible' is not even a longshot.

Re:Argument? (0)

Anonymous Coward | about 9 months ago | (#45775075)

Nope, there really is nothing more to it. It is as vacuous as the *quote fingers* hilarious *quote fingers* arguments made by other nerds here about patenting suing over patents.

Re:Argument? (1)

jythie (914043) | about 9 months ago | (#45775217)

Ah, so kinda like 'I will copyright the word "the" and sue everyone!', except the person is actually trying it in court. Yeah... real law and over the top literal interpretations of the law do not match up all that well...

Re:Argument? (0)

Anonymous Coward | about 9 months ago | (#45775295)

Nope, there really is nothing more to it. It is as vacuous as the *quote fingers* hilarious *quote fingers* arguments made by other nerds here about patenting suing over patents.

I would have said something common, like rounded corners...

Re:Argument? (4, Interesting)

TheCarp (96830) | about 9 months ago | (#45775365)

Ahhhh! However the hard drive is also evidence against him in a criminal trial. This means the contents should be available to him as a matter of discovery. If he has to answer for the contents of the drive, he needs to be able to have the same data they do to defend himself.

I lived with someone who did computer forensics for the defense at a trial. He had to install a lock on the office door for that, and he had many binders of reports. He also was provided images of all computers that were seized. Full images. (complete with malware!)

Its an interesting argument. The wallets are just data; data being used as evidence against him. They are not the bitcoins themselves. I would be surprised if there is any real direct precedent for this. The very files he needs and should be entitled to for the purpose of his defence, also necessarily give him control over the bitcoins....there is no separation between the two.

It will be interesting to see how these arguments go. It may in fact be that bitcoins perform an end run around existing federal law. It certainly will make me laugh if this works.

Re:Argument? (1)

Nidi62 (1525137) | about 9 months ago | (#45775825)

Ahhhh! However the hard drive is also evidence against him in a criminal trial. This means the contents should be available to him as a matter of discovery. If he has to answer for the contents of the drive, he needs to be able to have the same data they do to defend himself.

But then, if he is given access to the contents and sells or trades some of the bitcoins, that would be considered destruction of evidence. So even if he is given access to them, he cannot use them.

Re:Argument? (1)

mlts (1038732) | about 9 months ago | (#45775369)

There are people who have tried very similar arguments when the RIAA/BSA/MPAA came a-knocking and lost that case overwhelmingly in civil court.

Seize (1)

Anonymous Coward | about 9 months ago | (#45774705)

So, what does seizing mean in this context? The only thing needed is a private key. He doesn't have it and the feds do? I assume that's the case since he wants it back, right? In that case I must say it was an extremely poorly managed fortune.

Is there some other interpretation?

Re:Seize (2)

Zeinfeld (263942) | about 9 months ago | (#45775027)

I suspect the bitcoins in question were 'live' on the servers during the raid.

Running a marketplace means that the servers have to be able to move money about. So the servers have to have access to keys for spending to perform some operations. So the keys have to be accessible to the machine just like pretty much every web server with SSL has a private key that is effectively unencrypted. Sure it might be encrypted under a password but the password is no the same machine.

If he has $30m on the live systems I suspect he had even more stashed away offline. Begging for his money back is probably more of a ploy to try to throw the investigators off the chase for the rest of his cash.

The problem he is gonna have is that he is facing a 20-40 year jail term without parole. So the chance that he will be able to actually cash out his wallets before the bitcoin bubble bursts is essentially zero.

The fed have been shutting these schemes down continuously. Bitcoin is merely the latest incarnation of the old 'gold backed currency' that has been running for 15 years. The feds let them run for three years on average before they shut them down.

And before folk explain why bitcoin is different, all the previous schemes claimed to be different as well. And they all claimed to be beyond the reach of the law.

Re:Seize (2)

SuricouRaven (1897204) | about 9 months ago | (#45775843)

Shutting them down could be a bit trickier in this case - there's no one person or organisation to convict. Only thing they could do is find something to charge businesses that accept them with, and push it underground where it is comparatively ineffectual and not good for much more than a hobby.

Pefect justice (0)

TempleOS (3394245) | about 9 months ago | (#45774741)

Highs and lows balance. Being persecuted is how you earn heaven. God is perfectly just. Turn the other cheek. 20 Looking at his disciples, he said: “Blessed are you who are poor, for yours is the kingdom of God. 21 Blessed are you who hunger now, for you will be satisfied. Blessed are you who weep now, for you will laugh. 22 Blessed are you when people hate you, when they exclude you and insult you and reject your name as evil, because of the Son of Man. 23 “Rejoice in that day and leap for joy, because great is your reward in heaven. For that is how their ancestors treated the prophets. 24 “But woe to you who are rich, for you have already received your comfort. 25 Woe to you who are well fed now, for you will go hungry. Woe to you who laugh now, for you will mourn and weep. 26 Woe to you when everyone speaks well of you, for that is how their ancestors treated the false prophets.

Wow, another bitcoin thread (0)

Anonymous Coward | about 9 months ago | (#45774761)

It's been what - a few hours since the last one? How about some Duck Dynasty or Kim K threads, we can't get enough of them either...

Re:Wow, another bitcoin thread (0)

Anonymous Coward | about 9 months ago | (#45774793)

You forgot Snowden/NSA. And there's actually even a tiny scrap of "news" on that: he recently did an interview. (Stay tuned, same Bat channel. Or just go straight to http://www.cnn.com/2013/12/24/us/edward-snowden-interview/index.html?hpt=hp_t1 [cnn.com] )

Unequal treatment (1)

zoffdino (848658) | about 9 months ago | (#45774777)

I find it funny that downloading a song mean $22,000 fine. That software are only "licensed", not sold to you so you can't do everything you want to with. That importing books you legally acquired from a different country is a violation of copyright, and needs the Supreme Court to clarify that it's not. Meanwhile, the police can reason that seizing $700K in Bitcoins is just copying a file.

I don't know what Ulbricht's connection to Silk Road is, but the Crown must be prove that this asset is acquired through illegal activities to seize it.

Re:Unequal treatment (0)

Anonymous Coward | about 9 months ago | (#45774813)

I don't think it's funny that the nation with the worlds most powerful military has a corrupt government. Not at all. But I hope that it falls somehow.

Re:Unequal treatment (5, Insightful)

anagama (611277) | about 9 months ago | (#45775049)

There is no crown. In the US, the Feds seize first, worry about proof later. Civil forfeiture is big business, "policing for profit":

http://www.ij.org/policing-for-profit-the-abuse-of-civil-asset-forfeiture-4 [ij.org]

Americans are supposed to be innocent until proven guilty, but civil forfeiture turns that principle on its head. With civil forfeiture, your property is guilty until you prove it innocent.

Re:Unequal treatment (1)

Zeinfeld (263942) | about 9 months ago | (#45775083)

You clearly don't understand the US civil forfeiture laws then. Yes they can and yes they do.

There are certainly corrupt uses of the civil forfeiture laws but this is not one of them. The coins were seized from a rig operating a market for illegal drugs.

There are cases where the cops have performed seizures on no evidence at all and no indictment.

Re:Unequal treatment (0)

Anonymous Coward | about 9 months ago | (#45775129)

What exactly is funny? Sharing songs you don't hold copyright to is not legal according to statutory law. Police seizing evidence during an investigation is legal.

I don't know what Ulbricht's connection to Silk Road is, but the Crown must be prove that this asset is acquired through illegal activities to seize it.

Haven't been keeping up with the last century of case law have you?

Re:Unequal treatment (1)

geekoid (135745) | about 9 months ago | (#45775465)

I find it funny that you seem to think all those things are the same.

Good luck with that arguement. (1)

Nyder (754090) | about 9 months ago | (#45774801)

Seeing as you are going to have to prove how you got that much money worth of bitcoins, without tying your self to the criminal activity that went on thru Silk Road.

I don't see him getting his bitcoins back, but I guess if he figures he's probably going to jail for Silk Road, there isn't any harm in trying to get his bitcoins back.

Re:Good luck with that arguement. (0)

Anonymous Coward | about 9 months ago | (#45775043)

I can see him maybe getting off by claiming Silk Road is just a brokerage house. Remember, what he was arrested for is not running Silk Road, but for engaging in other nefarious things.

If SilkRoads was (1)

Anonymous Coward | about 9 months ago | (#45775091)

acting in the manner of a traditional marketplace such as a flea market where the owner of the flea market does not know what the merchants are selling, can the owner of the flea market be charged with criminal activity in the event someone sells marijuana?

Can someone explain it using small words? (1)

Anonymous Coward | about 9 months ago | (#45774929)

Why doesn't he have a copy of his "wallet" in a safe place, for just such, I say, for just such an eventuality? Since he's the only one with the key.

In the end the courts will rule the seized bitcoin (0)

Anonymous Coward | about 9 months ago | (#45774981)

If there is value in the property the Government always claims it under proceeds of crime legislation.

Sure, let's give it back to him (1)

Arancaytar (966377) | about 9 months ago | (#45774993)

It's not as if he'd use it for anything bad like having people killed or anything. He's never done that before.

crown royals terrified of alternative currency (0)

Anonymous Coward | about 9 months ago | (#45775177)

happy hollow days (or worse) is their wish for us unchosen brother & mother uns. free the innocent stem cells to compliment healthcare.love

Still an idiot (4, Interesting)

onyxruby (118189) | about 9 months ago | (#45775213)

My opinion that the less than Dread Pirate Roberts is a massive idiot has now been reinforced in a way I never would have imagined. The demand is tantamount to the drug lord demanding the feds return the hundred million dollars that could only have come from selling 100 kilos of cocaine many times over.

He hasn't got any possible legal pretense to justifying having the money and all it's going to do is prove his guilt. This idiot ought to look at the cartels and organized crime worldwide where they pointedly have this process called laundering money so that they can have at least have a pretense of legitimacy for their claims. No jury in the world is going to buy that this guy made tens of millions of dollars day trading bitcoin without a paper trail.

I haven't seen a single thing about the silk road operation that did anything other than prove the man was an idiot from inception through the present day. Why the hell are people defending this guy, just because he ran a trading site for drugs? The people who were deluded into thinking they were safe on silk road are being arrested, the intelligence gained was an incredible coup and likely the only reason it lasted as long as it did until the guy started trying to trade bitcoins for murder.

If you want to defend legalizing drugs, than make your argument for that, but don't defend one of the biggest idiots the Internet has ever seen.

Re:Still an idiot (3, Insightful)

geekoid (135745) | about 9 months ago | (#45775451)

"The demand is tantamount to the drug lord demanding the feds return the hundred million dollars that could only have come from selling 100 kilos of cocaine many times over."
no, there are many ways to make money. The feds need to prove the money came from selling drugs on the black market.

"He hasn't got any possible legal pretense to justifying having the money"
how do you know? Maybe he made it selling bitcoin high and buying them low.

"No jury in the world is going to buy that this guy made tens of millions of dollars day trading bitcoin without a paper trail."
Unless they have evidence he was doing something illegal, then it shouldn't even be in court.

My post in no way endorses whether or not any crime was committed, only pointing out for a legal prospective you seem to be full of shit.

Re:Still an idiot (4, Interesting)

onyxruby (118189) | about 9 months ago | (#45775595)

Your an idiot without any idea of how the law works. So let me point you in the right direction with some links that didn't come from wikipedia.

http://www.law.cornell.edu/wex/forfeiture [cornell.edu]
http://www.mackinac.org/1274 [mackinac.org]
http://www.fbi.gov/stats-services/publications/law-enforcement-bulletin/april-2012/money-laundering-and-asset-forfeiture [fbi.gov]
http://www.fbi.gov/about-us/investigate/white_collar/asset-forfeiture [fbi.gov]
http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=19&cad=rja&ved=0CHcQFjAIOAo&url=http%3A%2F%2Fwww.drugpolicy.org%2FdocUploads%2FAsset_Forfeiture_Briefing.pdf&ei=y6e5UofjNeGqyAGxxoHABQ&usg=AFQjCNH69cfy5T2Ayp8TL9L38XZJ4VPCcw&sig2=g3-gNZLWLpcJMyhtBipLCg [google.com]

But hey, it's not like there isn't precedent going back centuries for doing this.

http://online.wsj.com/news/articles/SB10001424053111903480904576512253265073870 [wsj.com]

Even if he somehow could get out of the drug dealer and murder for hire charges he would still have the problem of proving how he legitimately got the money and why he didn't pay taxes on it. Penalties for failing to report tens of millions of dollars in income could easily put him in prison for a decades and would still result in the loss of the bitcoins because he can't prove any legitimate means why which he got them.

He admitted an entirely new set of felonies around taxes just to try to claim the bitcoins back. Again, he is one of the biggest idiots that the Internet has ever known.

Re:Still an idiot (0)

Anonymous Coward | about 9 months ago | (#45775783)

So isn't the police also profiting from the drug trade?! isn't the law also profiting?! Those narcs guys only have a job because drugs are illegal... Judges jave to judge cases related to drugs, attorneys have to defend/acuse people then there is rehab and stuff... there is an entire "legit" chain of commerce related to the fact that drugs are illegal and being sold... Arrest and sieze those assets ass well!

Off Subject (1)

sudden.zero (981475) | about 9 months ago | (#45775267)

I know this is off subject and feel free to mod me as such, but did anyone else that was not logged in while trying to view this story get automatically forwarded to the craptastic beta.slashdot.org site? I know it is only a matter of time before Dice forces that train-wreck on us but I would much rather not switch until I am forced to. I mean if I wanted to be Javascripted to death, or the likes I would go visit some God awful PHPNuke blog site! Thanks a lot Dice :P

Re:Off Subject (0)

Anonymous Coward | about 9 months ago | (#45775335)

Dice sucks, but there is not a lot we can do about it now unless you want to put up the money to buy slashdot back from them. Optionally, start your own tech blog and "...they will come!"

Captain Obvious (1)

PopeRatzo (965947) | about 9 months ago | (#45775281)

Bitcoins are "not subject to seizure" by federal law

Um, the fact that they were just seized, seems to refute that statement.

Captain missing the point. (0)

Anonymous Coward | about 9 months ago | (#45775775)

That they were seized does not mean they were LEGALLY seized. The argument is not that it's not possible to seize bitcoins. It's that any such seizure is an illegal seizure, and therefore the property must be restored.

The feds certainly have the ABILITY seize an ex-wife's assets for debts her ex-husband incurred after they were divorced. But they can't do so LEGALLY. If they did, you'd see a petition like the one here - the seizure is unlawful, and the property must be returned.

Most don't understand the legal argument (4, Insightful)

Zontar_Thing_From_Ve (949321) | about 9 months ago | (#45775309)

Most people who have responded seem to not understand the legal argument here. Yes, this is risky to his case and basically he can't explain how he got the coins without hurting his own case. However, that's not the point. My guess is that he and his attorneys know that he is going to lose in court and go to jail. They are trying a novel argument that likely won't work that the government doesn't have the right to seize the coins no matter how acquired specifically because of their electronic nature. This is basically a low percentage "hail Mary" type play (to use an American football reference - look it up in Wikipedia if you don't understand it) to try to at least get him some income (and get his lawyers paid now) for when he gets out of jail. It's trying to turn the best case scenario into "Yeah, you're going to jail, but you'll still be rich when you get out". The unpleasant alternative is to say nothing, let the government keep the coins, and proceed with his weak defense that probably won't work anyway, in which case he goes to jail for a long time penniless. He's going to jail - the only question is whether this highly unlikely argument to keep the coins actually works and he at least gets to leave prison as a rich man. Anything can happen in a US courtroom, but I don't think this is going to be successful.

Re:Most don't understand the legal argument (1)

BringsApples (3418089) | about 9 months ago | (#45775719)

Where do bitcoins reside? Honestly, I know very little about bitcoins and everything that I look up leads me to believe that they reside in a virtual wallet on a PC. If this is true, then the feds can take the PC, thus taking the bitcoins on the PC.

Re:Most don't understand the legal argument (0)

Anonymous Coward | about 9 months ago | (#45775751)

Good summary of the legal issues. What I don't understand is why, if this is the case, why that argument can/should be made AT THIS TIME.

There's going to be a criminal trial at some point. If he's acquitted (admittedly a long shot), he quite possibly gets the bitcoins back. If not, and this is a "when I get out of jail..." argument, what's the prevent him from making the exact same argument post-trial? Why put his ownership on the record at a time when that admission can hurt him?

hey now (1)

geekoid (135745) | about 9 months ago | (#45775405)

they're my bitcoins, and I want them back. This Ulbricht fellow can shove off.

True foolishness (0)

Anonymous Coward | about 9 months ago | (#45775449)

His argument here is unlikely to work, and so is unlikely to do him much good.

On the other hand, admitting on the record that he owns these specific bitcoins is likely to harm him. Bitcoins are like dollar bills that remember every hand they've passed through (with pseudonomous but consistent identifiers for those people). It feels straightforward to trace the bitcoins to specific crimes if they can positively identify any of the OTHER parties to those crimes (e.g. someone else who's plead out). Being in provable possession of the proceeds of a crime feels like a Bad Thing to admit to.

How are they not subject to seizure? (0)

Anonymous Coward | about 9 months ago | (#45775605)

If they were indeed his, and he is accused of something that allows the government to seize valuable property because of, and they are valuable property, how are they somehow "not subject to seizure"? The US government can seize Swiss bank accounts, if they can get a hold of the necessary information, for crying out loud.

Should have had a hidden backup (0)

Anonymous Coward | about 9 months ago | (#45775781)

If he has/had a backup of the wallet somewhere, all he has to do is copy that backup and move it to a different wallet, taking it all back from the feds. (the feds have admitted with frustration, they do not know the password to the larger of the two wallets they seized, thus they cannot spend or transfer them.)

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