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US Government To Convert Silk Road Bitcoins To USD

samzenpus posted about 6 months ago | from the real-cash dept.

United States 408

angry tapir writes "The founder of the Silk Road underground website has forfeited the site and thousands of bitcoins, worth around $28 million at current rates, to the U.S. government. The approximately 29,655 bitcoins were seized from the Silk Road website when the Federal Bureau of Investigation (FBI) moved to close it in late September. 'The United States Marshals Service shall dispose of the Silk Road Hidden Website and the Silk Road Server Bitcoins according to law,' wrote Judge J. Paul Oetken, of the U.S. District Court for the Southern District of New York, in a court order that was issued this week. The ruling represents the largest-ever forfeiture of bitcoins. 'It is the intention of the government to ultimately convert the bitcoins to U.S. currency,' said Jim Margolin, a spokesman for the U.S. Attorney's office for the Southern District of New York."

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408 comments

Frosty Piss (-1, Offtopic)

Anonymous Coward | about 6 months ago | (#45983511)

Bitches!

Government sells seized assets (1, Insightful)

Anonymous Coward | about 6 months ago | (#45983513)

News at 11.

I understand that some people at slashdot love to argue about bitcoin, one way or another. But do we really have to have an article whenever someone decides to buy or sell some of them?

Re:Government sells seized assets (5, Insightful)

Anonymous Coward | about 6 months ago | (#45983599)

I understand that some people at slashdot love to argue about bitcoin, one way or another.But do we really have to have an article whenever someone decides to buy or sell some of them?

A forfeiture worth ~$28M is surely news?

Also, it is interesting to know that as long as you are charged with something (not convicted or anything, mind you), so much money can go poooof...

Killing two birds with one stone? (5, Insightful)

Anonymous Coward | about 6 months ago | (#45983515)

Are there even enough BTC exchanges out there to actually convert that much BTC into USD?

If there aren't, and the US government is persistent enough, wouldn't they be able to effectively "lock out" everyone else from getting money out of the system by basically draining the exchanges dry?

Like it or not, BTC is worthless unless you can exchange it for IRL bucks. It's a cute experiment and all, but at the end of the day your average shop keeper has to turn his BTC into something he can pay his rent with. If the US government is somehow able to effectively launch a "DoS" attack against all the exchanges, then what is going to happen to BTC?

Re:Killing two birds with one stone? (3, Funny)

radiumsoup (741987) | about 6 months ago | (#45983527)

you're right... unless his landlord takes bitcoins.

Re:Killing two birds with one stone? (5, Insightful)

Anonymous Coward | about 6 months ago | (#45983655)

That's such an awesome argument. I hear it all the time from BTC fanatics.

"Well if such and such accepted BTC, there'd be no problem. It's their fault for not accepting BTC!".

In what fucking universe do you exist in where this is a logical rebuttal to "I live in the real world, and my real world landlord doesn't accept BTC"? Right now, I can't buy groceries with BTC. I can't pay for parking with BTC. I can't take a friend out for lunch and pay with BTC. I can't buy a car from a local dealership with BTC, I can't go see a movie in the theatres with BTC.

I can exchange BTC for my local currency and then go about my business, but that's about it.

So really, I have no idea what dream world you live in where BTC is some magical universally accepted currency, because that isn't the universe we all occupy at this exact instant. The GP was right, and it's a legitimate question. What happens to the BTC market if the US government basically blocks all the exchanges by hitting them all with $23M worth of withdrawals?

Re:Killing two birds with one stone? (5, Interesting)

Anonymous Coward | about 6 months ago | (#45983743)

You arguments about Bitcoin's level of acceptance can be equally applied to PayPal in 1999. There where almost no sites accepting PayPal balance and you certainly could not pay your groceries and rent with PayPal. If someone sent you money with PayPal, all you could do was withdraw it to your bank account in local currency and that was about it.

While I'm not claiming Bitcoin is comparable to PayPal, you arguments are weak. Bitcoin is already serving niche markets that can't take PayPal, say online drugs. It also enables deals that would not have been possible with reversible payment methods. Between the high fees of Visa, NSA's prying eyes and PayPal's overall suckiness, cryptocurrency like Bitcoin really has place.

Should you "invest" in Bitcoin ? Probably not.

Re:Killing two birds with one stone? (0, Offtopic)

Anonymous Coward | about 6 months ago | (#45983781)

You arguments about Bitcoin's level of acceptance can be equally applied to PayPal in 1999...While I'm not claiming Bitcoin is comparable to PayPal, you arguments are weak.

You mom accepts PayPal!!

Re:Killing two birds with one stone? (0)

Anonymous Coward | about 6 months ago | (#45983895)

And BitchCoin!

Re:Killing two birds with one stone? (1)

Anonymous Coward | about 6 months ago | (#45983933)

Though for every dollar in a paypal account there had been a transaction to paypal for that number.

No one has bought these BTCs that the US government wants to withdraw, someone has created them and then traded them. Or at least not bought them from those very exchanges.

Re:Killing two birds with one stone? (2, Interesting)

Anonymous Coward | about 6 months ago | (#45984183)

No one has bought these BTCs that the US government wants to withdraw, someone has created them and then traded them.

No-one has "bought" the USD that might be in your bank account, either. The US government has created them, and then traded them.

Re:Killing two birds with one stone? (2)

hummassa (157160) | about 6 months ago | (#45984249)

Actually, it's more probable that your bank created them, with the blessing from the government.

Re:Killing two birds with one stone? (5, Insightful)

Kjella (173770) | about 6 months ago | (#45984035)

No really, I have no idea what dream world you live in where BTC is some magical universally accepted currency, because that isn't the universe we all occupy at this exact instant. The GP was right, and it's a legitimate question. What happens to the BTC market if the US government basically blocks all the exchanges by hitting them all with $23M worth of withdrawals?

Withdrawals? Do you think it's some kind of bank account? It's an exchange rate, set by buy and sell offers. Now the government could of course say they'll sell these, all at once and at any rate and the exchange rate would tank to zeroish because they'd fill every buy order but all I'd have to do is put up an offer for $0.001 / BTC and I'd get all the government's bitcoins for $23. Which would, given that they were trading for $1000 before, probably be a very good deal. In fact so good that somebody would probably scoop them up for $1 ($23,000) or maybe $100 ($2.3M), if they think this dip is purely market technical and temporary. No matter exactly where the exchange rate would end up nothing would be "blocked", sure some of the speculators would potentially lose a lot of money/potential profit - particularly if they were forced to cash out at the bottom, just like in the stock market - but trade would resume at whatever the new price would be. And eventually the government's store of bitcoin would be exhausted and their influence on the price gone.

Re:Killing two birds with one stone? (5, Insightful)

geekmux (1040042) | about 6 months ago | (#45984109)

That's such an awesome argument. I hear it all the time from BTC fanatics.

"Well if such and such accepted BTC, there'd be no problem. It's their fault for not accepting BTC!".

In what fucking universe do you exist in where this is a logical rebuttal to "I live in the real world, and my real world landlord doesn't accept BTC"? Right now, I can't buy groceries with BTC. I can't pay for parking with BTC. I can't take a friend out for lunch and pay with BTC. I can't buy a car from a local dealership with BTC, I can't go see a movie in the theatres with BTC.

I can exchange BTC for my local currency and then go about my business, but that's about it.

So really, I have no idea what dream world you live in where BTC is some magical universally accepted currency, because that isn't the universe we all occupy at this exact instant. The GP was right, and it's a legitimate question. What happens to the BTC market if the US government basically blocks all the exchanges by hitting them all with $23M worth of withdrawals?

Replace BTC with USD in your entire statement, and you'll have your answer as to why everyone (including governments) sees the USD as some sort of "magically universally accepted currency".

On top of that, who the hell pays with cash anymore? The true universally accepted currency is the one sitting behind that piece of plastic you keep swiping everywhere. If that happens to be dollars, pesos, or rupees, it doesn't really matter, because the conversion all happens in the background at your bank. Because of this, there is little or no reason BTC couldn't start up their own credit card and BECOME as universally accepted as anything else. The only thing stopping this is the current "magically universally accepted currency" and all the corruption behind it.

I use cash (-1)

Anonymous Coward | about 6 months ago | (#45984159)

For everything, in fact I haven't owned a credit card or debit card in years. *EVERYONE* should pay in only cash.

Re:Killing two birds with one stone? (5, Insightful)

oodaloop (1229816) | about 6 months ago | (#45984115)

I can't buy groceries with BTC

Can you use gold to buy groceries? What, they don't accept gold at the supermarket? I guess it doesn't have any value, other than being able to exchange it for cash. What a waste!

Value of Gold (4, Interesting)

Firethorn (177587) | about 6 months ago | (#45984407)

Gold is at least pretty and useful in a number of industrial and electrical applications.

Of course, I don't trade in gold coins anyways - assessment costs* will eat up any 'profits' from gold price increases 9 times out of 10.

*To determine the purity of the gold hasn't changed since you got the coins.

Re:Killing two birds with one stone? (4, Interesting)

thunderclap (972782) | about 6 months ago | (#45984211)

Overstock.com is taking BTC. So are many others. If you actually look back in our history you will see that the dollar didn't reach wide acceptance to post civil war. So BTC is a viable currency in its growth stages. You being a luddite is fine. Its your right. Just don't whine when your Landlord in 2025 does only take BTC.

Re:Killing two birds with one stone? (5, Informative)

michelcolman (1208008) | about 6 months ago | (#45984365)

Right now, I can't buy groceries with BTC.

Wrong. Whole Foods accepts bitcoin.

I can't take a friend out for lunch and pay with BTC.

Wrong again [bitcoin.it]

I can exchange BTC for my local currency and then go about my business, but that's about it.

Overstock.com, Amazon, CVS, Target, Victoria's Secret, Zappos, the list keeps growing.

Of course most of these stores actually use a payment processor that immediately converts the bitcoins to USD for them, but if more and more stores start accepting it, at some point the currency may become so practical that such conversions will no longer need to be made. If a company does business with another company that accepts bitcoin, they may as well take bitcoin from their clients and then use those bitcoins to pay their suppliers. Transaction fees are much lower than those for credit cards, you don't even need any middle men.

Re:Killing two birds with one stone? (3, Insightful)

Anonymous Coward | about 6 months ago | (#45983635)

There is not enough liquidity on all the exchanges to sink such a large amount. It will drive the price rock-bottom if done in one swoop. What you need to do is milk it for a few months. This way the market can absorb the Bitcoins and you can get all of the 28 million.

What about the rest of the Silk Road stash ? It's worth 600 million dollars at today's prices.

I love it how the government ends up being the largest winner of the Bitcoin bubble. "Our commitment for America in 2014: make the junkies and internet speculators balance the Medicare budget."

Re:Killing two birds with one stone? (1)

MouseTheLuckyDog (2752443) | about 6 months ago | (#45983697)

Would make sense if the seized bitcoins could pay for more then one day of Medicare.

Re:Killing two birds with one stone? (1)

SuricouRaven (1897204) | about 6 months ago | (#45983921)

Unless that's their plan.

Re:Killing two birds with one stone? (4, Informative)

Njovich (553857) | about 6 months ago | (#45984027)

According to bitcoincharts.com, trading volume in the past 24h was over 540k bitcoins. Not sure what part of that is from exchanges, but I doubt 30k extra bitcoins are going to really be earth shattering. I could be wrong though, Bitcoin prices are volatile and this kind of news can affect things and cascade.

Re:Killing two birds with one stone? (2)

1s44c (552956) | about 6 months ago | (#45983799)

Or the US government pushes the price down and lots of people buy in with the expectation that it will go up again.

This might help spread BTC around to more people.

Re:Killing two birds with one stone? (0)

Anonymous Coward | about 6 months ago | (#45984057)

Exchanges doesn't buy and sell any BTCs. Other people buy and sell them through the exchanges. So the exchanges can't become "dry".

Re:Killing two birds with one stone? (0)

Anonymous Coward | about 6 months ago | (#45984133)

Are there even enough BTC exchanges out there to actually convert that much BTC into USD?

Yes. This is about a week's worth of volume on the major exchanges.

Re:Killing two birds with one stone? (1)

mic0e (2740501) | about 6 months ago | (#45984177)

mtgox has a trade volume of about 17k BTC per day [http://bitcoincharts.com/markets/mtgoxUSD.html], so you can assume that those 30k BTCs are about as much as is traded in one day. I don't have an economics degree, and I am proud of not having one, but I assume that, would an entity put this many BTCs on the market at a single time, the market value would collapse by about 70%, and take a week to recover.

Re:Killing two birds with one stone? (1)

mic0e (2740501) | about 6 months ago | (#45984189)

Maybe even a lot faster than a week - most bitcoin traders are greedy bastards and will immediately recognize the opportunity to buy cheap stock.

Re:Killing two birds with one stone? (1)

michelcolman (1208008) | about 6 months ago | (#45984383)

I, for one, will jump at the opportunity to buy some at less than half price. I'm sure plenty of others will, too. I'd be surprised if it dropped more than 75% or so (which is a normal fluctuation for bitcoin). The currency has already survived a few large sell orders remarkably well.

Silky! (-1)

Anonymous Coward | about 6 months ago | (#45983521)

Well that's the end of bitcoins. The Government has its hand in.

"according to the law" (4, Insightful)

dnaumov (453672) | about 6 months ago | (#45983533)

According to the law, the guy hasn't actually been convicted of anything yet, so WTF?

Re:"according to the law" (5, Informative)

Kaenneth (82978) | about 6 months ago | (#45983547)

No, but his money and property has.

Civil Forfeiture law is insane.

Re:"according to the law" (1)

Mitreya (579078) | about 6 months ago | (#45983605)

No, but his money and property has. Civil Forfeiture law is insane.

So.... They are going to return his bitcoins if he is found innocent in a court of law, right??

Re:"according to the law" (0)

Anonymous Coward | about 6 months ago | (#45983619)

No, but he can sue to get them back. He needs to prove the bitcoins are innocent, not that he is.

Re:"according to the law" (1)

Kaenneth (82978) | about 6 months ago | (#45983647)

He'll also have to put up a cash bond in order to even file a case.

Re:"according to the law" (0)

Anonymous Coward | about 6 months ago | (#45983775)

Remind me to never do business in the US. Ever.

Re:"according to the law" (0)

Anonymous Coward | about 6 months ago | (#45984227)

Remind me to never do business in the US. Ever.

you are fine unless you business is connected with illegal narcotics.

Re:"according to the law" (3, Insightful)

Anonymous Coward | about 6 months ago | (#45984247)

Or unless the U.S. government (or your competitors, for that matter) claim it's connected with illegal narcotics.

Re:"according to the law" (4, Informative)

wvmarle (1070040) | about 6 months ago | (#45983791)

Not likely.

The US prosecution already decided that The Silk Road is an illegal venture, and on those grounds they have seized the property linked to it. This is exactly the same grounds on which they can seize say a boat load full cocaine, plus the stack of cash that's on the same vessel.

A totally different issue is to find and prosecute the individuals responsible for running the venture (e.g. those operating the boat or responsible for the cocaine on board). These people may in turn also have property linked to the illegal venture, which then may be seized as well (I don't know what US law says about that).

Now if the person is found not guilty, he can prove the seized bitcoin (and possibly other property) are his, and that the operation was in fact not illegal or that the seized property was not linked to that operation, then he may be able to get back his property.

Re:"according to the law" (0)

Anonymous Coward | about 6 months ago | (#45983855)

That's the "free" country we get to live in.

I would want to know the cost of the entire operation, including other misc. costs. To see if it was worth seizing [supposedly] 28 million?

Re:"according to the law" (0)

Anonymous Coward | about 6 months ago | (#45984145)

not that insane. the government seized the bitcoins from a website that it says was doing illegal things. the government then charged the person they say was running the illegal website. even if ulbricht is found not guilty then he'd be found not guilty of running the website. he can't then claim the bitcoins belonging to the site were his, because he just said the site wasn't his. for him to get the coins back the website would have to be found legal and he would have to be determined to be its rightful owner. i guess here's the matrix

not owner + website illegal = no coins. you can't profit from an illegal venture and you can't claim to own something you say is not yours
owner + website illegal = no coins. you can't profit from an illegal venture
not owner + website legal = no coins. you can't claim to own something you say isn't yours
owner + website legal = sue for coins.

which part is insane?

Re:"according to the law" (2)

Raumkraut (518382) | about 6 months ago | (#45983625)

Indeed. I see a lot of assertions that Ulbricht was "The Dread Pirate Roberts", and in this article that he was the "founder". Has Ulbricht actually been found - in a court of law - to be either, or confessed to being so? Not so far as I've heard. There's a lot of accusations flying from government agencies, which are then repeated verbatim by "news" agencies who are more interested in a dramatic story than accuracy or facts.

However, the phrase "... shall dispose of the bitcoins ... according to law" is pretty much a non-statement. They're hardly going to say "we're going to sell them off illegally". What they will do all depends on what the law says, and it may well say they can't do jack until and unless the accused is found guilty, and the assets found to be the proceeds of crime.
That said, it is entirely possible that his assets could be lawfully siezed and disposed of by US law enforcement at this point, since they apparently have the legal power to do so when they suspect or accuse someone of a crime, in certain circumstances/jurisdictions.

Re:"according to the law" (1)

1s44c (552956) | about 6 months ago | (#45983819)

As I understand it the law says they can take the cash, or in this case bitcoins, and unless someone can prove that the cash was in no way involved in any crime the police get to keep it and spend it. This law has been horribly misused many times in the past.

In this case it's highly likely this is drug money but even so they don't need to wait until that's proven in court.

Re:"according to the law" (3, Funny)

michelcolman (1208008) | about 6 months ago | (#45984417)

the police get to keep it and spend it.

Too bad for them the Silk Road doesn't exist anymore...

Re:"according to the law" (5, Insightful)

Rich0 (548339) | about 6 months ago | (#45984293)

Has Ulbricht actually been found - in a court of law - to be either, or confessed to being so? Not so far as I've heard.

This is an asset forfeiture case. He isn't being tried or punished. His assets are being tried in a court of law, and the constitution doesn't give any human rights to assets, so they aren't entitled to such novelties as "trial by jury" or "innocent until proven guilty" or the "right to confront witnesses." Don't worry though, every time a stack of money was asked to speak up if they had any concerns with the proceedings it went along in silent acquiescence.

In drug cases the first thing the US Government typically does is seize any assets they can find and use forfeiture to confiscate them with only an administrative procedure. The owner of the assets has no standing in the court to speak or prevent this - he is technically not under trial.

Of course, when the accused is finally under trial he'll have a much harder time of it now that he has no assets with which to pay a lawyer. Oh, and if he is found to be innocent it doesn't change the fact that his assets were already found to be guilty. Apparently you can try to sue to get your money back, but you need to prove the innocence of the assets in question.

And yes, if this sounds absolutely insane, that merely demonstrates that you aren't.

Re:"according to the law" (0)

Anonymous Coward | about 6 months ago | (#45984217)

According to the law, the guy hasn't actually been convicted of anything yet, so WTF?

pretty sure they have a damning amount of evidence to prove he was a drug dealer..

So the US government buys bitcoins now? (1)

BringsApples (3418089) | about 6 months ago | (#45983557)

I thought bitcoins weren't legal tender.

No, the US government _sells_ bitcoins (0)

Anonymous Coward | about 6 months ago | (#45983563)

I thought bitcoins weren't legal tender.

You can sell other things than legal tender. Happens all the time.

Re:So the US government buys bitcoins now? (0)

Anonymous Coward | about 6 months ago | (#45983581)

I thought bitcoins weren't legal tender.

I thought they were going to sell them?

Re:So the US government buys bitcoins now? (4, Insightful)

ledow (319597) | about 6 months ago | (#45983587)

They aren't.

They are seized goods.

Same way they'd sell your car if that's what you had illicitly gained and they'd seized it - and they'd sell it for US$.

This is just conversion of a seized good to monetary value (and probably at way below current rates, if "police auctions" etc. are any measure of how they'll go about it).

Re:So the US government buys bitcoins now? (0)

Anonymous Coward | about 6 months ago | (#45983735)

"(and probably at way below current rates, if "police auctions" etc. are any measure of how they'll go about it)."

Well, I;m keeping £1000 handy for when they dump. ~26,500 BTC in a single sale will lower the price drastically... for a day or so. I wonder if that means I'm profiting from the proceeds of crime? I bet they think it does...

Re:So the US government buys bitcoins now? (0)

Anonymous Coward | about 6 months ago | (#45983601)

Legal tender laws have nothing to do with bitcoin. Anyway, US is selling bitcoins, not buying.

The whole legal tender thing is a bit of a mess, anyway.
http://en.wikipedia.org/wiki/Legal_tender#United_States

Re:So the US government buys bitcoins now? (3, Informative)

angel'o'sphere (80593) | about 6 months ago | (#45983731)

You might be surprised, but here in germany US dollars are no legel tender either.

Re:So the US government buys bitcoins now? (0)

Anonymous Coward | about 6 months ago | (#45983815)

So is not the D-mark.

Re:So the US government buys bitcoins now? (1)

kyrsjo (2420192) | about 6 months ago | (#45983999)

The D-mark isn't legal tender in Germany either, not since 1999 when they switched to the Euro..

Re:So the US government buys bitcoins now? (1)

kyrsjo (2420192) | about 6 months ago | (#45984007)

Baaah, didn't se the not. Strange way of writing, this Anonymous Coward has..

Re:So the US government buys bitcoins now? (0)

Anonymous Coward | about 6 months ago | (#45984351)

Confuse you I can

legal tender (0)

Anonymous Coward | about 6 months ago | (#45983577)

i guess if the bitcoins were illegal the government would have to destroy them.

gj creating a new currency bitcoin, i didn't see that coming

Re:legal tender (0)

Anonymous Coward | about 6 months ago | (#45983913)

Does this make cars "legal tender" as well? No? Just goods. Good. Glad we have that sorted.

Marked as forfeited? (4, Interesting)

Anonymous Coward | about 6 months ago | (#45983591)

Wasn't those bitcoins marked as forfeited on the various block watching sites?

If nobody want those bitcoins, they might be very hard to sell while other bitcoins can be sold without a problem.

Re:Marked as forfeited? (0)

Anonymous Coward | about 6 months ago | (#45983671)

This starts to sound like regulating the currency. Sure, now it's a blacklist but how long until we're using a whitelist? I would hate seeing the US criminal gov getting even a dime but I think there are much bigger questions involved here.

Re:Marked as forfeited? (2, Informative)

Anonymous Coward | about 6 months ago | (#45983707)

They aren't being blocked because they are currently held to the US government, they are being blocked because they were stolen. Sure, maybe if it were only a few bitcoins nobody would care. But millions of dollars worth? That's not a small amount of money. Worse yet, it would be damaging to bitcoins and other cryptocoins. If they went through with this and actually cashed in that much at once, the value of bitcoins would tank like never before.

Re:Marked as forfeited? (1)

Anonymous Coward | about 6 months ago | (#45983721)

They were not stolen. They are part of a critical investigation.

Re:Marked as forfeited? (2, Insightful)

Anonymous Coward | about 6 months ago | (#45983749)

Was the wallet taken and extracted from without the owners' permission, yes or no?

Even if the owner was a complete scumbag, it doesn't mean much. The exchanges do not want to deal with the US government nor this wallet and they don't have to.

Re:Marked as forfeited? (0)

Anonymous Coward | about 6 months ago | (#45983807)

I don't think you understand the concept of a criminal investigation. Seizure is not theft.

Re:Marked as forfeited? (5, Insightful)

Anonymous Coward | about 6 months ago | (#45983831)

I don't think you understand. No one gives a shit about what US law you think applies here or what rights the US gov't does or doesn't have here. To the Bitcoin community they were stolen.

Re:Marked as forfeited? (0)

Anonymous Coward | about 6 months ago | (#45983903)

A lot of people care about what the law says. Anything else would be anarchism.

Re:Marked as forfeited? (2, Insightful)

Anonymous Coward | about 6 months ago | (#45983935)

Who is this "Bitcoin community" who decided that the bitcoins were stolen? And why should I trust that group of people? After all, if they decide that those Bitcoins are stolen, how can I be sure that they won't mark my Bitcoins as stolen should I ever do something they don't like (whatever that may be)?

Captcha: trapped

Re:Marked as forfeited? (1)

Rich0 (548339) | about 6 months ago | (#45984317)

Who is this "Bitcoin community" who decided that the bitcoins were stolen? And why should I trust that group of people? After all, if they decide that those Bitcoins are stolen, how can I be sure that they won't mark my Bitcoins as stolen should I ever do something they don't like (whatever that may be)?

Well, it really boils down to freedom of speech - those bitcoins are forever traceable back to this operation. Anybody can choose to accept them in a trade or refuse to accept them in a trade. If the perception is that there are many out there who would not accept them, then their value is likely to be reduced, as even those willing to accept them in a trade probably would prefer not to since they could be higher to sell.

And yes, it probably does reduce the value of Bitcoin on the whole, but there isn't anything that anybody can do about that. This isn't an anonymous currency.

Re:Marked as forfeited? (1)

Hal_Porter (817932) | about 6 months ago | (#45984313)

It's futile to get into arguments about legitimacy with the US Government. Legitimacy depends on force as Heinlein observed.

http://en.wikiquote.org/wiki/Starship_Troopers#Chapter_2 [wikiquote.org]

" ... I was not making fun of you personally; I was heaping scorn on an inexcusably silly idea -- a practice I shall always follow. Anyone who clings to the historically untrue and thoroughly immoral doctrine that violence never settles anything I would advise to conjure up the ghosts of Napoleon Bonaparte and the Duke of Wellington and let them debate it. The ghost of Hitler could referee and the jury might well be the Dodo, the Great Auk, and the Passenger Pigeon. Violence, naked force, has settled more issues in history that has any other factor, and the contrary opinion is wishful thinking at its worst. Breeds that forget this basic truth have always paid for it with their lives and their freedoms."

So you can say they're not legitimate and they can say the same about you. However they've got the power to back up their decisions and you don't because no one uses naked force as effectively as the US Government. If it makes you feel any better consider the bit in bold to be descriptive rather than prescriptive - i.e. a statement of how the world does work rather than how the world should work.

Re:Marked as forfeited? (2)

ihtoit (3393327) | about 6 months ago | (#45984163)

theft=taking without consent
seizure=taking without consent
therefore:
seizure=theft

You're welcome.

Re:Marked as forfeited? (0)

Anonymous Coward | about 6 months ago | (#45984411)

theft=Anybody but the government taking without consent
seizure=The government taking without consent

FTFY. You can't seriously suggest that the government should not have a monopoly on certain rights.

Re:Marked as forfeited? (1)

Luckyo (1726890) | about 6 months ago | (#45984415)

I hope you live as you preach as:

Your assets = not my assets.
My friend's assets = not assets.

Therefore:

My friend's assets = your assets.

My friends gifted his assets that are in your possession to me. Please provide me with your address so I can fetch them. Thanks.

Re:Marked as forfeited? (0)

Anonymous Coward | about 6 months ago | (#45983773)

They were stolen by the gubmint.

Re:Marked as forfeited? (1)

dbIII (701233) | about 6 months ago | (#45984295)

Are you seriously arguing about morality in the internal workings of a pyramid scheme baited for geek?

Re:Marked as forfeited? (3, Interesting)

magic maverick (2615475) | about 6 months ago | (#45983687)

That would be an interesting point. However, there is no method currently in BitCoin to prevent seized bitcoins from being "spent" (transfered to another address). Nor, as far as I know, is there any wallet that would highlight that a particular bitcoin is "bad". So, if the gov. does it sensibly, they could easily sell off these bitcoins for cash. Hell, they could even just hold an auction rather than going through an exchange. They probably will do that. And they'll find someone willing to pay at least $10 a bitcoin (which is like 1% of the current value) because once they bitcoins have changed hands, they are easy to launder (or "mix") if not to just spend.

Re:Marked as forfeited? (5, Interesting)

Dr_Barnowl (709838) | about 6 months ago | (#45984005)

You're running into one of the properties of BitCoin here - it's not anonymous, it's pseudonymous. You can't hide the transaction history of a given coin, because that's how BitCoin works - it's a single vast verifiable public transaction log. If someone doesn't want to accept coins that passed through a particular wallet, then it's easy to verify this. And if there are enough people who won't touch Silk Road coins, then their value will be dubious to the people who ordinarily would.

It's impossible to "launder" BitCoin for this reason - you can always trace the entire transaction history for a given coin or subdivisions thereof.

That said, I think it's unlikely that people will turn them down.

Re:Marked as forfeited? (0)

Anonymous Coward | about 6 months ago | (#45984047)

Read up on bitcoin tumbling.
http://bitcoin.stackexchange.com/questions/17807/what-is-a-bitcoin-tumbler

Very possible (and common!) to launder.

Re:Marked as forfeited? (1)

Vintermann (400722) | about 6 months ago | (#45984085)

They don't work as presently designed, because only an idiot would put clean money in. You might get back coin associated with a crime, and what would be in that for you? All risk and no gain.

The only way to make tumblers work is to bribe the people with clean coin, give them a hefty premium for participating. That's how money laundering works in the offline work as well. Sure, there's money to be made as a mule ... for a little while.

Re:Marked as forfeited? (0)

Anonymous Coward | about 6 months ago | (#45984087)

Smells like obfuscation that's hard to trace for humans, but trivial to analyze automatically.

Enigma, anyone?

Re:Marked as forfeited? (1)

thegarbz (1787294) | about 6 months ago | (#45984277)

And if there are enough people who won't touch Silk Road coins

I wonder what the risk here is that would cause someone not to want to touch such a coin? A BTC is a BTC just like any other. It's like cash. You're likely holding money in your wallet right now that was used in a drug deal at some point. Does that make that money any less valuable to you?

Who cares what the history of the coin is providing that it is not double spent, which is the purpose of the log to begin with.

Re:Marked as forfeited? (0)

Anonymous Coward | about 6 months ago | (#45983835)

Why would nobody want those BTC?
I'll take them for a good price.

They sell all kinds of stuff on propertyroom (0)

Anonymous Coward | about 6 months ago | (#45983613)

Like gold, silver... and junk.

legitimizing? (1)

luckymutt (996573) | about 6 months ago | (#45983733)

So does this action somehow legitimize bitcoins?
Sure, you can't pay your mortgage with them at this point, but doesn't this mean that the US Federal Gov't now recognize that it has some legitimate value?

Re:legitimizing? (1)

Anonymous Coward | about 6 months ago | (#45983949)

They also sell cars. And every thing else that is "forfeited" (except stuff that is illegal to sell).

Bitcoins have never been illegal to own, buy or sell. So why would this "legitimize" bitcoins any more than they are already.

Re:legitimizing? (0)

Anonymous Coward | about 6 months ago | (#45983967)

The US government has never said thet they do not have value. That would be like saying that a red hat has no value no TF2. It's tradeable digital goods. it has as much value as someone is willing to pay for it. But it is not legal tender.

Re:legitimizing? (1)

davidhoude (1868300) | about 6 months ago | (#45983969)

Has anyone argued against their value? It is quite easy to see what they are worth.... I think peoples main argument is that they are not widely accepted for commerce.

Re:legitimizing? (0)

Anonymous Coward | about 6 months ago | (#45984071)

Has anyone argued against their value? It is quite easy to see what they are worth.... I think peoples main argument is that they are not widely accepted for commerce.

Yes, to include governments not wanting to recognize the new tender that would upset their corrupt USD ponzi scheme, which is why the US Government should not be allowed to convert it. This would be akin to them seizing a ton of pure cocaine, and them choosing to "convert" it to USD by selling it on the street themselves.

One might also argue in future legal cases involving bitcoin that when the US Government converted these bitcoins, at that point they acknowledged them as official legal tender, and any future attempts to disprove this should be null and void.

As far as value, one can argue that shit all day long, especially with a currency that shot up in value a thousand times over practically overnight. It makes the precious metals market look as boring as collecting bonds.

Re:legitimizing? (0)

Anonymous Coward | about 6 months ago | (#45983985)

IMHO it at least establishes that selling bitcoins is not illegal (they won't sell the drugs they seized!)

Re:legitimizing? (0)

Anonymous Coward | about 6 months ago | (#45984421)

The only thing this implies is that Bitcoins are not inherently illegal to buy or own, which would have been a very tough thing to defend in court anyway. They can still prosecute people for money-laundering or tax evasion if they make significant profits without documenting them.

Re:legitimizing? (0)

Anonymous Coward | about 6 months ago | (#45984395)

Selling seized assets doesn't impart them with "legitimate value". The government could auction off a crook's comic book collection, but that doesn't make comic books legal tender.

in7ormative culmcum (-1, Troll)

Anonymous Coward | about 6 months ago | (#45983909)

COUNTERPART, this mistake or comin6 a piis However I don't

Exchange rates? (0)

Anonymous Coward | about 6 months ago | (#45983959)

How will selling that many bitcoins affect the exchange rates?

Trap (0)

Anonymous Coward | about 6 months ago | (#45984063)

Those BC are going to be trackable for a while at least.

Just print it? (0)

Anonymous Coward | about 6 months ago | (#45984067)

Am I the only one that read the summary and thought it would just give them another excuse to print 28M of IRL money? I didn't even think about exchanging, but I'm sure that's what they mean by 'convert' and not "Hey we just effectively seized 28M of USD, let's make sure the mint produces that much more since we can't exactly touch bitcoins"

so because SR made money (1, Insightful)

ihtoit (3393327) | about 6 months ago | (#45984129)

and deprived the Fed of tax revenue because they did it in a currency that the Fed don't control, the Fed get pissy and fucking STEAL IT!?

Something is VERY FUCKING WRONG with this picture!

Re:so because SR made money (2)

ihtoit (3393327) | about 6 months ago | (#45984139)

OK. since these bitcoins can be uniquely identified, how about the BTC community REFUSING them? That'll piss in the Fed's cornflakes.

Because they can (1)

MrKaos (858439) | about 6 months ago | (#45984367)

That is all.

... that's it everyone (0)

Anonymous Coward | about 6 months ago | (#45984385)

Silk Road held an appreciable fraction of the world supply. Sure they'll make millions upon millions, but that's a drop in the US government's budget. The effect, and certainly the actual intent, is to punch the bottom out of the market.

Legitimizing (1)

shentino (1139071) | about 6 months ago | (#45984429)

Well, at least by selling them and not outright destroying them or sitting on them forever, the feds have endorsed that they are at least legal to possess.

Ironically this may actually legitimize them.

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