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October 7, 2013

Arrested Silk Road ‘mastermind’ has Bitcoins seized

Ross Ulbricht has been accused of money laundering, hacking, narcotics trafficking and conspiracy of hiring a hitman.

By Claire Vanner

Ross Ulbricht, the alleged administrator behind illegal marketplace, Silk Road, has appeared in court after some of his Bitcoin fortune was seized by the FBI.

The website that allegedly sold drugs and illegal substances online was shut down by officials last week when Ulbricht was arrested. The site was only accessible via Tor, making it more difficult for authorities to track users.

Ulbricht is also accused of trying to arrange the killing of one of the site’s former accomplices after they threatened to expose details of the site’s users. Ulbricht has been deemed too dangerous to be bailed according to US prosecutors. He has been accused of money laundering, hacking, narcotics trafficking and conspiracy of hiring a hitman.

As a knowledgeable hacker, Ulbricht – who allegedly went under the name Dread Pirate Roberts – has already had 26,000 Bitcoins seized by the FBI. Despite the seizure of these Bitcoins, it is thought that Ulbricht has a further 600,000 Bitcoins ($80m) stored in encrypted silos. While the FBI has apparently seized these too, they are as yet unable to decrypt them, according to Forbes.

"The FBI has not been able to get to Ulbricht’s personal Bitcoin yet," reported Forbes. An FBI spokesperson told Forbes that the "$80m worth" that Ulbricht had "was held separately and is encrypted". At current exchange rates, that represents slightly more than 5% of all bitcoins in circulation.

Silk Road operated by selling drugs online via online Bitcoin transactions where customers placed money into an account and used it as a Bitcoin purse. Many people who used the site have since had their purses frozen or their accounts seized.

One user posted on a Silk Road forum: "Yeah, I literally sent $400 over right before this message showed up" – referring to the FBI seizure notice that now sits on the site’s homepage.

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