> An FBI spokesperson said to Hill that the “$80m worth”
The FBI gave the number denominated in USD, so the journalist had to estimate the true number of BTC. The 600k is almost certainly calculated from that $80m number.
They had it one phrasing and then the editor got on their back about no one knowing what 600k BTC means, so they started to add the dollar value, then put it in front but forgot to fix the circulation percentage to make sense.
This isn't unheard of, and they're probably not an idiot.
"An FBI spokesperson said to Hill that the “$80m worth” that Ulbricht had “was held separately and is encrypted”."
You can't "hold" bitcoin wallets. Anyone with the private key can spend the bitcoins without having to have the wallet. It would be funny if someone could transfer bitcoins the FBI "holds" to show them a wallet is not something unique that you can be the only one to have.
If Ross Ulbricht is really the guy who ran this site, why in the world was he doing his work from San Francisco? His alleged job was the pinnacle of "work anywhere". He took so many precautions to keep his identity secret that he must've known that his activities would at some point gather focused attention from the authorities.
Living in San Francisco allowed the feds to pick them up on their lunch hour. Even just hopping the border to Mexico would've required them to get international cooperation and extradite him.
He'd likely be a free man if he were in Croatia or Kazakhstan.
> He'd likely be a free man if he were in Croatia or Kazakhstan.
You're talking out of your ass. As a person who was born in Croatia and lived there for almost 25 years I can tell you that Croatia has been extraditing people left and right for years now.
I don't know what kind of lawless country you're imagining, but in reality Croatia is subject to EU laws, cooperates with lots of international institutions, has very strict anti-drug laws and there is no way an international criminal of DPR's profile would ever be safe there. I've seen my friends go down and get criminal records over a few grams of weed... DPR would have someone knocking on his door as soon as his cover was blown.
Ex-soviet countries would be a much safer bet as they don't seem to want to cooperate with US authorities (Snowden et al). Central America might also be a good bet, but then you risk getting killed by the cartels for undermining their business model, if they ever find out who you are.
"He'd likely be a free man if he were in Croatia or Kazakhstan."
You think so? One of my college professors was jailed in Kazakhstan because he neglected to bribe one of the customs workers on his way out of the country. That professor had grown up in Kazakhstan and still managed to get screwed over by the government there -- even after he was released, he could not get his money back, as the authorities had "lost" it.
The reality is that there are benefits to living in a developed country, even the USA. I can understand why he would not have wanted to leave even though he was running SR, even with the risks of being caught.
Living in San Francisco might have allowed him in hide in plain sight. Who is going to suspect a 20-somthing year old who lives in San Fran of running a multi million dollar drug business. He doesn't attract attention to himself, especially from his family and friends who are most likely to report any suspicious behavior of his to authorities. If he moved overseas and started buying mansions in cash, a red flag somewhere might have gone off. His family might start asking questions he didn't have the answers to. After all, the unabomber was only caught because of the suspicions of his sister in law and brother.
He might have thought of himself as immune to being found out, so it didn't occur to him to move. He was content where he was, and just stayed. Getting caught didn't even come to mind, because he was so confident in himself. He obviously was confident.
> He'd likely be a free man if he were in Croatia or Kazakhstan.
Both narcotics trafficking and murder-for-hire are things for which the US has been known to send armed agents -- or actual military -- into foreign countries without coordination with the local government to capture people to be brought back to the US for trial.
> Even just hopping the border to Mexico would've required them to get international cooperation and extradite him.
No, it wouldn't. See, e.g., United States v. Alvarez-Machain, 504 U.S. 655 (1992)
He'd likely be a free man if he were in Croatia or Kazakhstan
You think Croatia or Kazakhstan don't have anti drug laws? You think they have stricter rules about police, law enforcement, or picking people up off the streets? You think those countries have nicer prisons and less corrupt judges and cops than USA?
To go along with "work anywhere" is "live anywhere." If you can live anywhere, then you will pick a place where you actually want to live. Croatia or Kazakhstan might be nice for a visit, but I doubt you would want to live in either of these places unless you had substantial roots there (you were born and raised there.)
Given there are so many independently wealthy people living in San Francisco, it must have its charm.
This is what I keep wondering. The caribbean coast of Venezuela has many expatriate enclaves where he could be living like a king with no possibility of extradition. That, along with hiring an FBI agent for a hit, makes me think he was not as clever as he was made out to be.
Likely just lulled himself into a false sense of security. He believed his own story that his precautions were sufficient and effective, and that he could just walk amongst the public and never be caught.
He'd likely be a free man if he were in Croatia or Kazakhstan.
In small countries with no culture of westerners living there long term he'd stand out like a sore thumb. In dictatorial countries they'd think he was a CIA operative and be tailed. Oh, and upon capture he'd be beaten until he told them every little secret, bitcoin passwords included.
So good old USA was better and SF is probably the best way for a guy "acting weird" and staying online all the time to hide. He should have retired a year ago. It's a like playing in a casino, you're bound to lose long term
Right after the DPR bust there was a lot of discussion about how it was a death knell for bitcoin, but this is exactly why it's such a revolutionary type of technology: if DPR had any currency in a paper wallet, he could simply print it out, put it in a safe deposit box, and pick it up once he is out of prison.
For a currency to be so secure that a state cannot seize it from a citizen is unprecedented.
> It will be fascinating to see how this plays out.
The obvious way would be ambiguity about the final fate of his bitcoins, and centuries' worth of hacker legends about the lost treasure of the Dread Pirate Roberts.
If he uses a brain wallet, it would be even more secure. The ONLY possible way to seize the bitcoins would require him to comply. Another interesting bit is the fact that this might make him a billionaire by the time he's released from prison- just from the appreciation of bitcoin's value.
I have another curiosity about the FBI's intent to seize his bitcoins- is it fair to seize all of them? If half of these bitcoins were earned while bitcoins were only worth 1/10 of current value, should only 10% of that half be seized? This might be arguable in court.
The asset seizure issue with regards to bitcoin is interesting, but not unprecedented. A lot of the same issues that come up here come up in the more traditional context of seizing assets stashed in Bermuda, etc. You have Bermudan banks that won't allow access to assets without consent from the owner, and the question is whether giving that the owner can be forced to sign the consent form or whatever.
"Even if the FBI is not able to transfer the money, merely having possession of the wallet file itself is enough to prevent the coins being spent."
Isn't this totally false? He could have easily made backups of the wallet and even given copies of it to others. I'd expect there's a whole bunch of ways that these bitcoins could still get spent?
The beauty is that NOT spending the 600K BTC is economically equivalent to giving a 600K gift to all other bitcoin owners. If the news ever came out that these coins are lost for all times, the exchange price for BTCs would most likely increase 600K/11M or about 5.5% in an instant.
(Of course, there's no way this could happen since we don't know what private keys are stored in Ross' head. Also this is based on the efficient market hypothesis and real world results have other complecting factors.)
Yes, it is wrong as many commenters on the site also point out. He could have multiple backups of his wallet file and spending the bitcoins out of one of his backups would invalidate the coins in the wallet the FBI has.
This is interesting as a more generic case: before criminals had to stash their money in a hide in case they got caught and into prison. Now they can convert the money into bitcoins and simply arrange that they can't unlock the wallet. Things that help:
- you can make indefinite copies of your locked wallet so TLA basically can't confiscate it
- you can protect your wallet with a secret (passphrase and/or a key) so that they can't unlock it
- you can distribute the secret among several people using one of the secret sharing protocols
- or hide it steganographically in an ordinary file while the TLA in question still can't prove it's there
So, one additional way to secure your bitcoins would be to have a "deadman's switch" machine with a copy of your wallet. If you don't enter a passphrase into the machine by a certain date, then it will transfer your wallet's contents to another "bugout" wallet. This invalidates the seized copy of your wallet. Companies that offer this service should also offer a feature that causes "anonymous donations" to appear in your legal defense fund.
I've had a question that I"m curious to hear the community's reaction on: Doesn't the FBI wanting to seize the bitcoins do more to legitimize the currency than anything thus far? Isn't it tantamount to saying "Yes, this is like dollars, francs, or another legitimate currency that we need to seize."
I'm wondering if that conversation has come up among management at FBI and what the outcome has been.
Even if the FBI is not able to transfer the money, merely having possession of the wallet file itself is enough to prevent the coins being spent.
Ugh, no. Having the file means you can transfer out the bitcoins. Anyone having the file can transfer out the bitcoins, so the FBI securing that wallet doesn't lock down those bitcoins.
The FBI cannot properly "seize" the bitcoins unless they use the wallet to transfer the coins to a fresh address they make and control. And I'm not sure that traditional seizure laws allow that, because AFAIK we've never had this scenario before.
I can't imagine they would let a password get in the way of this. Even with an encrypted wallet, the balances of the content addresses are available for viewing for convenience sake.
The reference client (I's not mentioned which wallet software) uses hundreds of thousands of rounds of key stretching, enough that on a GPU you're only getting a few attempts at the key. Might irritate them enough to crack out a good sized farm.
Passwords are protected under his 5th amendment rights. The government would have to come up with a much stronger reason to force the password from him other than "we want it"
The interesting part is if he does have a backup, and if he does access the funds in there for his legal defense. Would his attorney consider that money to be tainted, and thus refuse to accept it?
What might be more interesting is if a conspirator is waiting to move the coins to another wallet at some point soon before LEOs can start bruteforcing/wrenching the password.
Big question is whether turning over the passphrase would be "testimonial". I could see it being argued that it's a forgone conclusion he owns these bitcoins -- enough evidence to tie him to silk road, and evidence in the block chain showing those coins came from silk road.
(This is relevant due to the fifth amendment to the constitution. In many cases, turning over a password or combination is considered self incrimination and thus cannot be compelled by the state.)
Why would anyone trust bitcoin values? If the US government wanted to crash the bitcoin market couldn't they just generate a few million bitcoins themselves and then dump them?
I don't think the NSA is going to care about spending a few 10's of millions of dollars on custom bitcoin hashing hardware. Unless people don't think the NSA can outdo some fly-by-night ASIC developers.
If the US government is truly concerned about bitcoin, it won't survive long.
What's overwhelmingly clear from this article is that either the feds, or at least the people they are sending to talk to the media, have really no idea how bitcoin works.
Saying "The Bureau is in a position equivalent to having seized a safe belonging to a suspect with no idea of the combination – and no hope of forcing it open any other way." is completely incorrect.
What's is rather shocking is the kinds of mistakes he made.
Not some subtle but plain simple. Like using personal email to register on forums and promote SR and recruit people.
Using stackoverflow with personal email, again... Yes they are not some solid evidences, but made the FBIs life, to get the guy, much easier. You might say that it's easy for me to point out those mistakes but they are so basic and it's not that he was running some Nigerian type of scam, he must have been way more careful.
Or keep messages about the 'murder-for-hire'. Yeah it's rather obvious that no one got hired but good luck explaining this negotiation tactics to the judge. Plus he mentions $80k for other 'murder-for-hire'. I'm really curious how the thing with this 'murder' will end up. I mean he could have just simply deleted them just in case. It's not FB that it would stay forever...
The more interesting question regarding this seizure is whether the FBI can compell the creators of BitCoin to assist in decrypting what they have just seized. For example, there are a number of statutes that require those operating communications networks maintain the ability for the governemnt to access them regardless of the encryption or other security features being used. I don't know the corresponding baking law as well but it would not surprise me if the same laws that require banks to comply with seizing fund, blocking wire transfers, and tracking where money goes in the course of a criminal investigation could kick in here.
Certainly something like this would have a big effect on the BitCoin market. I'm interested to see what happens in the future.
[+] [-] eterm|12 years ago|reply
Why would exchange rate affect what percentage of bitcoins 600k are! This is terribly confused thought from the journalist:
600k bitcoins, that's "almost $80m".
$80m! But at current exchange rates that's "just over 5%!".
When sitting there are the actual numbers of bitcoins in his wallet and bitcoins in circulation...
[+] [-] salmonellaeater|12 years ago|reply
The FBI gave the number denominated in USD, so the journalist had to estimate the true number of BTC. The 600k is almost certainly calculated from that $80m number.
[+] [-] calinet6|12 years ago|reply
They had it one phrasing and then the editor got on their back about no one knowing what 600k BTC means, so they started to add the dollar value, then put it in front but forgot to fix the circulation percentage to make sense.
This isn't unheard of, and they're probably not an idiot.
[+] [-] theboywho|12 years ago|reply
"An FBI spokesperson said to Hill that the “$80m worth” that Ulbricht had “was held separately and is encrypted”."
You can't "hold" bitcoin wallets. Anyone with the private key can spend the bitcoins without having to have the wallet. It would be funny if someone could transfer bitcoins the FBI "holds" to show them a wallet is not something unique that you can be the only one to have.
[+] [-] devcpp|12 years ago|reply
[+] [-] 300bps|12 years ago|reply
Living in San Francisco allowed the feds to pick them up on their lunch hour. Even just hopping the border to Mexico would've required them to get international cooperation and extradite him.
He'd likely be a free man if he were in Croatia or Kazakhstan.
[+] [-] VexXtreme|12 years ago|reply
You're talking out of your ass. As a person who was born in Croatia and lived there for almost 25 years I can tell you that Croatia has been extraditing people left and right for years now.
I don't know what kind of lawless country you're imagining, but in reality Croatia is subject to EU laws, cooperates with lots of international institutions, has very strict anti-drug laws and there is no way an international criminal of DPR's profile would ever be safe there. I've seen my friends go down and get criminal records over a few grams of weed... DPR would have someone knocking on his door as soon as his cover was blown.
Ex-soviet countries would be a much safer bet as they don't seem to want to cooperate with US authorities (Snowden et al). Central America might also be a good bet, but then you risk getting killed by the cartels for undermining their business model, if they ever find out who you are.
[+] [-] betterunix|12 years ago|reply
You think so? One of my college professors was jailed in Kazakhstan because he neglected to bribe one of the customs workers on his way out of the country. That professor had grown up in Kazakhstan and still managed to get screwed over by the government there -- even after he was released, he could not get his money back, as the authorities had "lost" it.
The reality is that there are benefits to living in a developed country, even the USA. I can understand why he would not have wanted to leave even though he was running SR, even with the risks of being caught.
[+] [-] jpwagner|12 years ago|reply
[+] [-] aestra|12 years ago|reply
Living in San Francisco might have allowed him in hide in plain sight. Who is going to suspect a 20-somthing year old who lives in San Fran of running a multi million dollar drug business. He doesn't attract attention to himself, especially from his family and friends who are most likely to report any suspicious behavior of his to authorities. If he moved overseas and started buying mansions in cash, a red flag somewhere might have gone off. His family might start asking questions he didn't have the answers to. After all, the unabomber was only caught because of the suspicions of his sister in law and brother.
He might have thought of himself as immune to being found out, so it didn't occur to him to move. He was content where he was, and just stayed. Getting caught didn't even come to mind, because he was so confident in himself. He obviously was confident.
[+] [-] dragonwriter|12 years ago|reply
Both narcotics trafficking and murder-for-hire are things for which the US has been known to send armed agents -- or actual military -- into foreign countries without coordination with the local government to capture people to be brought back to the US for trial.
> Even just hopping the border to Mexico would've required them to get international cooperation and extradite him.
No, it wouldn't. See, e.g., United States v. Alvarez-Machain, 504 U.S. 655 (1992)
[+] [-] rmc|12 years ago|reply
You think Croatia or Kazakhstan don't have anti drug laws? You think they have stricter rules about police, law enforcement, or picking people up off the streets? You think those countries have nicer prisons and less corrupt judges and cops than USA?
[+] [-] aestra|12 years ago|reply
[+] [-] neals|12 years ago|reply
Maybe he's like me.
[+] [-] gexla|12 years ago|reply
Given there are so many independently wealthy people living in San Francisco, it must have its charm.
Edit: Edited city
[+] [-] nl|12 years ago|reply
I'm pretty sure he wasn't relying on his physical location to protect him.
[1] http://www.dailytelegraph.com.au/news/nsw/ross-william-ulbri...
[+] [-] pault|12 years ago|reply
[+] [-] chaz|12 years ago|reply
[+] [-] bsullivan01|12 years ago|reply
In small countries with no culture of westerners living there long term he'd stand out like a sore thumb. In dictatorial countries they'd think he was a CIA operative and be tailed. Oh, and upon capture he'd be beaten until he told them every little secret, bitcoin passwords included.
So good old USA was better and SF is probably the best way for a guy "acting weird" and staying online all the time to hide. He should have retired a year ago. It's a like playing in a casino, you're bound to lose long term
[+] [-] nether|12 years ago|reply
[+] [-] JanezStupar|12 years ago|reply
Good criminal spends his time preparing for when he gets caught.
[+] [-] appleflaxen|12 years ago|reply
For a currency to be so secure that a state cannot seize it from a citizen is unprecedented.
It will be fascinating to see how this plays out.
[+] [-] khafra|12 years ago|reply
The obvious way would be ambiguity about the final fate of his bitcoins, and centuries' worth of hacker legends about the lost treasure of the Dread Pirate Roberts.
[+] [-] CompelTechnic|12 years ago|reply
I have another curiosity about the FBI's intent to seize his bitcoins- is it fair to seize all of them? If half of these bitcoins were earned while bitcoins were only worth 1/10 of current value, should only 10% of that half be seized? This might be arguable in court.
[+] [-] bradleyjg|12 years ago|reply
I imagine that turning over the bitcoins will be a condition of the near inevitable plea bargain.
[+] [-] kybernetyk|12 years ago|reply
Yes ... if no backups exist.
[+] [-] gambiting|12 years ago|reply
[+] [-] ikken|12 years ago|reply
[+] [-] rayiner|12 years ago|reply
[+] [-] Ellipsis753|12 years ago|reply
Isn't this totally false? He could have easily made backups of the wallet and even given copies of it to others. I'd expect there's a whole bunch of ways that these bitcoins could still get spent?
[+] [-] drcode|12 years ago|reply
(Of course, there's no way this could happen since we don't know what private keys are stored in Ross' head. Also this is based on the efficient market hypothesis and real world results have other complecting factors.)
[+] [-] joshstrange|12 years ago|reply
[+] [-] yason|12 years ago|reply
- you can make indefinite copies of your locked wallet so TLA basically can't confiscate it
- you can protect your wallet with a secret (passphrase and/or a key) so that they can't unlock it
- you can distribute the secret among several people using one of the secret sharing protocols
- or hide it steganographically in an ordinary file while the TLA in question still can't prove it's there
[+] [-] stcredzero|12 years ago|reply
[+] [-] flopunctro|12 years ago|reply
You can't possibly trust any company with this kind of service. This is something you need to [learn how to] build yourself.
The concept of "deadman's switch" has an implicit component of "trust no one", IMHO.
[+] [-] 27182818284|12 years ago|reply
I'm wondering if that conversation has come up among management at FBI and what the outcome has been.
[+] [-] danielweber|12 years ago|reply
Ugh, no. Having the file means you can transfer out the bitcoins. Anyone having the file can transfer out the bitcoins, so the FBI securing that wallet doesn't lock down those bitcoins.
The FBI cannot properly "seize" the bitcoins unless they use the wallet to transfer the coins to a fresh address they make and control. And I'm not sure that traditional seizure laws allow that, because AFAIK we've never had this scenario before.
[+] [-] whyleyc|12 years ago|reply
[1] Obligatory XKCD http://xkcd.com/538/
[+] [-] nwh|12 years ago|reply
The reference client (I's not mentioned which wallet software) uses hundreds of thousands of rounds of key stretching, enough that on a GPU you're only getting a few attempts at the key. Might irritate them enough to crack out a good sized farm.
[+] [-] chiph|12 years ago|reply
The interesting part is if he does have a backup, and if he does access the funds in there for his legal defense. Would his attorney consider that money to be tainted, and thus refuse to accept it?
[+] [-] unknown|12 years ago|reply
[deleted]
[+] [-] rainforest|12 years ago|reply
[+] [-] rdl|12 years ago|reply
(This is relevant due to the fifth amendment to the constitution. In many cases, turning over a password or combination is considered self incrimination and thus cannot be compelled by the state.)
[+] [-] Synaesthesia|12 years ago|reply
[+] [-] SeanDav|12 years ago|reply
Surely you can make copies of your wallet and keep them in various secure locations?
[+] [-] thoughtsimple|12 years ago|reply
I don't think the NSA is going to care about spending a few 10's of millions of dollars on custom bitcoin hashing hardware. Unless people don't think the NSA can outdo some fly-by-night ASIC developers.
If the US government is truly concerned about bitcoin, it won't survive long.
[+] [-] noarchy|12 years ago|reply
[+] [-] llamataboot|12 years ago|reply
Saying "The Bureau is in a position equivalent to having seized a safe belonging to a suspect with no idea of the combination – and no hope of forcing it open any other way." is completely incorrect.
[+] [-] gedrap|12 years ago|reply
Not some subtle but plain simple. Like using personal email to register on forums and promote SR and recruit people.
Using stackoverflow with personal email, again... Yes they are not some solid evidences, but made the FBIs life, to get the guy, much easier. You might say that it's easy for me to point out those mistakes but they are so basic and it's not that he was running some Nigerian type of scam, he must have been way more careful.
Or keep messages about the 'murder-for-hire'. Yeah it's rather obvious that no one got hired but good luck explaining this negotiation tactics to the judge. Plus he mentions $80k for other 'murder-for-hire'. I'm really curious how the thing with this 'murder' will end up. I mean he could have just simply deleted them just in case. It's not FB that it would stay forever...
[+] [-] rarw|12 years ago|reply
Certainly something like this would have a big effect on the BitCoin market. I'm interested to see what happens in the future.