Auction gavel and bitcoin cryptocurrency money

BTC seized from Silk Road hacker will be used to clear Ross Ulbricht’s $183M debt

Silk Road creator Ross Ulbricht has been cleared of a major part of his sentence. A recently uncovered court filing shows that Ulbricht agreed to clear his $183 million debt by forfeiting all claims to a trove of BTC connected to the notorious marketplace.

According to the filing, the U.S. government now owns all rights to 69,370 BTC which was confiscated from a hacker that exploited Silk Road before the FBI shut down the marketplace. 

“Ulbricht further relinquishes all right, title and interest in the [69,370 BTC] and agrees that said property shall be forfeited to the United States and disposed of according to law by the United States,” the document said. 

When the assets were seized in 2020, it was worth around $1 billion. However, it is worth around $3 billion at current market prices and more than covers the $183 million restitution that Ulbricht’s 2015 sentence stipulated. 

Ulbricht, who is already serving the eighth year of his life imprisonment sentence, has since launched an appeal to overturn the ruling. The latest agreement has been noted to be a significant win according to people close to Ulbricht, including his mother, Lyn Ulbricht.

Lyn Ulbricht told Wired that when they first discovered the court filing, the family was very pleased that the financial penalty had been reversed. She also added that the appeal would continue to forge ahead until the unjust sentence is corrected. 

Wired also noted that the circumstances surrounding the signing of the agreement were unorthodox. The Southern District of New York and the Justice Department attorneys who instigated the initial sentence were not involved. However, the agreement brings some respite to Ulbricht, who is now free to earn an income while he is still incarcerated. 

How will the government handle the confiscated Bitcoin?

Per the filing, the U.S. government will sell off the confiscated BTC. After Ulbricht’s money judgment is paid off, the rest of the proceeds from the seizure will go to the Federal Reserve.

However, it has been pointed out that the government has not always made profits from its numerous confiscated digital currency sales. Back in 2014, it auctioned off around 30,000 BTC for around $19 million. The stash would be worth well over $1 billion at today’s prices.

The government currently possesses billions worth of confiscated wallet addresses. The DOJ made a record-breaking confiscation amounting to about $3.6b just this year. 

Watch: CoinGeek New York panel, Investigating Criminal Activity on the Blockchain

YouTube video

New to blockchain? Check out CoinGeek’s Blockchain for Beginners section, the ultimate resource guide to learn more about blockchain technology.