FBI struggles to seize 600,000 Bitcoins from alleged Silk Road founder

Having seized 26,000 Bitcoins belonging to site users, authorities battle to control Ross Ulbricht's personal wallet

The FBI has found that seizing an anonymous decentralised peer-to-peer currency was trickier than it seemed, following the Bureau’s bust of the international drugs marketplace, Silk Road.

When Ross Ulbricht, known as Dread Pirate Roberts to users of the site, was arrested last week, the FBI seized 26,000 Bitcoins belonging to Silk Road customers. But it also attempted, unsuccessfully, to claim the nearly 600,000 - thought to be worth around $80m - which Ulbricht himself is thought to be holding.

Bitcoin is a digital currency based on a methods of cryptography similar to those used to protect confidential emails. Due to its decentralised nature – the currency does not rely on any centralised agency to process payments, instead relying on work done by users’ computers – it is popular for a number of fringe-legal and illegal uses. One of those uses was Silk Road, where Bitcoin was required for all transactions.

In order to transfer Bitcoins out of a “wallet”, the name for the digital file which contains the encrypted information necessary to spend the currency, users need to know that wallet’s password or “private key” Continue reading

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