After the FBI executed an arrest warrant last week on Ross Ulbricht, the alleged mastermind behind the massive online drug marketplace Silk Road, it seized about 26,000 Bitcoins, worth roughly $3.2 million, that were stored in the site's user accounts.
However, Forbes reports that the FBI has yet to decrypt Ulbricht’s personal Bitcoin stash, which reportedly dwarfs the Silk Road accounts – about 600,000 Bitcoins, worth roughly $80 million.
If the $80 million estimate that the FBI spokesperson provided to Forbes is accurate, it would mean Ulbricht controlled nearly 5% of all Bitcoins on the market.
Despite the encryption difficulties, the bureau still has control of Ulbricht’s Bitcoin wallet, meaning nobody can really access its contents. For as long as the FBI can’t crack the safe, the $80 million remains in limbo.
The report confirms not only Ulbricht’s success with Silk Road, but also his strict control over its operations. The FBI alleged in its criminal complaint that, aside from a handful of administrators he had hired, Ulbricht managed the bulk of the site on its own, including its finances.
Meanwhile, Bitcoin’s transparency has made the FBI’s seizure of the 26,000 Silk Road users’ Bitcoins public. Based on recent activity, namely a 27,000-Bitcoin transaction conducted conveniently one day after Ulbricht’s arrest, Reddit users have identified the account into which the FBI has transferred the confiscated currency. The Bitcoin account has since been renamed “Silkroad Seized Coins” on Blockchain, the site that tracks all activity on the Bitcoin network. Bitcoin users have since taken to posting comments on the Blockchain info, according to reports.
The visibility will only make the closure of the site more painful for Silk Road users, who have no chance of re-claiming the Bitcoin they had stored on the site, the FBI spokesperson told Forbes.
“There is not likely to be restitution in this case,” she said. “If they’re knowingly buying something illegal, they can’t get their money back.”
Colin Neagle covers emerging technologies and the startup scene for Network World. Follow him on Twitter @ntwrkwrldneagle and keep up with the Microsoft, Cisco and Open Source community blogs. Colin's email address is email@example.com.