Silk Road forums
Discussion => Newbie discussion => Topic started by: greenman on June 24, 2013, 12:28 am
-
I'm new to the forums and I figured I might as well post here until I can get approved to move on to other categories.
The original article was here: http://letstalkbitcoin.com/post/53700133097/users-bitcoins-seized-by-dea
I believe they probably took someone's wallet after they did a controlled delivery. This sounds like it's silk road related.
Users’ Bitcoins Seized by DEA
By Brian Cohen and Adam B. Levine
The Drug Enforcement Administration posted an Official Notification that Bitcoin (i.e. property) belonging to Eric Daniel Hughes was seized for forfeiture pursuant to 21 U.S.C. § 881, because the property was used or acquired as a result of a violation of the Controlled Substances Act (21 U.S.C. §§ 801 et seq.)
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
The DEA appears to have been the first agency to seize actual Bitcoins from an individual with this seizure. Exactly how the Bitcoin was seized is not known as of this writing. However, reading the top of the notice it appears that Mr. Hughes can request release of the seized property during the pendency of the forfeiture proceeding due to hardship. How the DEA would return the Bitcoin to Mr. Hughes is also unknown.
‘“Seizure” is probably a word used to imply that money was received in the process of a Silk Road sting operation, rather than actually seized from the bitcoin user’s wallet. ” said Andreas M. Antonopoulos, a security expert and Let’s Talk Bitcoin contributor
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.
image
The honeypot scenario seems more likely as the sender-address was 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. Our efforts unearthed no Bitcoin addresses that contained ANY bitcoins, apparently sent far downstream. BTCBible.com has submitted a FOIA request on the details surrounding this incident, and on Monday during business hours will be following up with the Charleston, NC Police Department to see if there’s a police report to correspond with the confiscation.
Reviewing the Department of Justice’s Forfeiture website of which the DEA is a participant, it appears that the seizure records are continuously updated and that the seizure may have been posted in the notice as early as April of this year.
Other agencies participating in the seizure program include Bureau of Alcohol, Tobacco, Firearms and Explosives, Federal Bureau of Investigation, U.S. Attorney’s Office, U.S. Customs and Border Protection, U.S. Postal Inspection Service and the U.S. Secret Service.
The DEA consolidated the regulations for seizure and forfeiture in October 2012. This included “… Sec. 8.14 {which} adds a provision to the Department’s regulations allowing for the pre- forfeiture disposition of seized property when the property is liable to perish, or to waste, or to be greatly reduced in value while being held for forfeiture, or when the expense of holding the property is or will be disproportionate to its value.” With the exponential rise in the value of Bitcoin around the time the Bitcoin were seized, it is unknown whether or not the DEA used this new provision as a means to convert the Bitcoin into U.S. Dollars to lock in its value at the time.
-
Of note is that this happened on April 12. Would love to see DPR or some other admin check whether this is indeed a SR honeypot or not. Though I suppose it's possible that addresses that old have been wiped?
-
It's not totally clear whether they actually performed a controlled delivery, I don't think?
One thing that I can't really find is an arrest record for this Eric Hughes. Does anyone know any good public directories to search in? Or are DEA arrests more hush-hush than that?
-
If you read the document released, it states that, "The names of persons or businesses appearing in this notice are not necessarily criminal defendants or suspects, nor does the appearance of their names in this notice necessarily mean that they are the target of DEA investigations".
And I doubt they seized a wallet. If so they would likely have seized everything in it, not the transaction of one wallet. If a drug dealer gets busted, they don't just take the money used in the bust, but any other cash found on the premises. If the dealer can prove it was obtained legally, they'll release it. Otherwise, it's theirs. Given FinCENs ruling on Bitcoin I doubt they'd treat a Bitcoin wallet any differently.
What interests me is that the Bitcoins continued to circulate after they were seized. I can't imagine the DEA would be able to cash them out immediately, as I believe seizure law requires property to be held until the original owner has had time to contest - should they wish - the forfeiture; also, doing so might mean they'd be risking market volatility should he manage to make a case for having "his" Bitcoin returned. But maybe someone else can shed some light (and maybe if Bitcoin are cash-equivalents they'd just plan on sending a check).
-
I want to know how they actually got the bitcoins if it was not a honey pot account? And if it was honeypot account what did the vendor send and what did the man arrested get charged with? interesting
-
tldr... HARDWARE WALLET!
-
It's not totally clear whether they actually performed a controlled delivery, I don't think?
One thing that I can't really find is an arrest record for this Eric Hughes. Does anyone know any good public directories to search in? Or are DEA arrests more hush-hush than that?
Lorimer did some digging and found Hughes's pending court case (3 charges) in the Charleston district records. I made a copy of the webpages: https://dl.dropboxusercontent.com/u/182368464/2013-06-sr-hughescourtrecords.html.maff (Hughes also popped up as a hit due to a traffic fine, but that was it; so I guess he either had a clean record before this or he moved there recently.)
Main thread: http://dkn255hz262ypmii.onion/index.php?topic=176320.0
-
Oh crap, I just saw this reply. Thanks for the great info, gwern! Glad to see you around these parts.
-
Hopefully Mr Hughes has an attorney like Saul Goodman
That's interesting... So if the DEA had a SR account and someone buys from them, they would receive your real name and real address so that they can send the 'product'. Could this constitute probable cause for them to get a warrant and search your place, even without doing a controlled delivery? You could argue that you never ordered the package. But, is your name and address on the order considered 'probable cause'?? If so, they could go to your house and search, couldn't they? where are the legal experts in the forum.
After searching your place and finding your unencrypted wallets, they could trace the BTC they received back to you. (Except they would have never received the BTC unless you finalized early)
Doesn't seem like a 'shot in the dark' so much, considering that the best way of staying 'under the radar' (from the postal service's perspective) is to use your REAL name and REAL address.
-
After searching your place and finding your unencrypted wallets, they could trace the BTC they received back to you. (Except they would have never received the BTC unless you finalized early)
Even if you did FE it would be difficult for them to trace the Bitcoin they received back to you.
SR has an internal tumbler, so the Bitcoin paid out to the vendor you're buying from are not (directly) linked to your wallet. The DEA might be able to track the amount & use that as evidence, but they couldn't look at the blockchain or the address to determine that it was definitely you that made the purchase. Plus many people don't make exact transactions (generally you send more that you need from your usual wallet to your SR account) & some might not have BTC wallets at all (in theory you could always just send any anonymously-purchased BTC directly to your SR account).
If you're worried about your computer being searched, stop using it to access SR. Install Tails on a USB drive & then wipe your home computer of anything SR related. Then get a cheap laptop. (Some people recommend removing the hard drive, but it's less suspicious if you just leave it looking like a shitty laptop. :) ) When you want to use SR, find a coffee shop with free WiFi (so that your ISP won't be able to tell you're using TOR) & boot your laptop from the Tails USB.
If you do all your SR browsing & ordering this way, the only computer-related evidence will be that little USB drive - even if both the laptop & your home computer are seized & your ISP forced to turn over logs they'll find no evidence.
There are other methods (I don't use Tails) but as long as no one looks over your shoulder when you're placing an order at the coffee shop, using a Tails bootable USB, a laptop, and an ISP other than your own is one of the simplest & most secure.
I know this post isn't that detailed, but there are plenty of Tails tutorials out there if you want to take that step! I just wanted to show that it's not difficult to set things up so that even a thorough search of your computers would bring up nothing. :)
It's likely not necessary for most buyers to go to the trouble tho. The guy above was vending & selling locally. As long as you're not doing either TBB is probably fine.
-
Good post, thanks.
HAve you used liberte? which of the two is better