Friday, June 28, 2013

Bitcoin Reaches New Milestone: DEA Confiscates Some Using Asset Forfeiture

Bitcoin Reaches New Milestone: DEA Confiscates Some Using Asset Forfeiture:
Let's Talk Bitcoin
reports
that for what may be the first time ever, the DEA has
seized bitcoins from a drug seller on Silk Road, the digital
marketplace for drugs (and other things) that's hidden on the Tor
network. The notification of asset forfeiture (which the DEA is
required by law to post) is below:
DISTRICT OF SOUTH CAROLINA
13-DEA-581051, 11.02 Bitcoins,
Acct.#1ETDwGUC1QcjYuehFr3u1FD3MvDaUs7SFy,
VL: $814.22 which was seized in Charleston, SC from Eric Daniel
Hughes AKA Casey Jones on April 12, 2013

According to TechCrunch
, Hughes "was described in some [Silk
Road] postings as being an incautious drug salesperson." I asked
for comment from the DEA earlier this week, but have yet to hear
back. Here's Let's Talk Bitcoin speculating on how the seizure
happened:
The Bitcoin address referenced in the complaint recieved a
transaction for 11.02btc at 17:10:36 Blockchain time on the date
noted as “seized”.  This could mean that either the DEA took
control of a computer with an unencrypted wallet and transferred
the amount to a DEA controlled wallet, or more likely that this was
not an in-person confiscation at all. This could be an illicit
“Silk Road” transaction, where US authorities set up a “honeypot”
selling account, and accepted the 11.02btc as payment.
 
The honeypot scenario seems more likely as the
sender-addresswas
not emptied
 into the “DEA” account. There is one other
transaction in the referenced account, for 17.24btc which entered
5/22/13 and is transferred
out 5/28/13
 - It moves through one intermediary account,
is then combined into a block of 200btc and moves through an
account that transacts only in 100
or 200btc blocks totaling 10,100btc
.  Following any one of
those 200btc blocks leads you to apparent “mixer” transactions,
small amounts of value peeling off of the larger amount at each
hop. Taint analysis reveals that nearly 10% of those bitcoins
eventually pass through an address
responsible for transacting more than 419,000btc
 since
2012
With an anonymized blockchain, and lacking skilled forensic
investigators (Are you one? Contact us!) it’s hard to do anything
but speculate. 
More Reason
on Bitcoin