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If the coins were seized on Silk Road servers they didn't belong to anyone at the time but the Silk Road. We can argue the merits of returning the coins to the

by orik 12y ago

If the coins were seized on Silk Road servers they didn't belong to anyone at the time but the Silk Road. We can argue the merits of returning the coins to the last previously associated wallets; but I don't think the U.S. Gov has any intention of returning drug money to drug buyers the same way they wouldn't give gun money back to arms buyers.

rplnt 12y ago
A very stretched example follows, be warned: An online shop selling clothing also happens to sell firearms illegally. Its assets are seized. What about money from pending orders for the clothing? It seems to me it's obvious in this case. Couldn't SR users start a class action lawsuit against gov for seizing their assets stored on SR servers? This is assuming not everything sold there was illegal (this might be wrong).
- malka 12y ago
  not everything sold here was illegal. However, if I was a SR customer, I would probably not want the gov to know it.
- vidarh 12y ago
  They could certainly petition the government for the return of money that couldn't be tied to anything illegal. But is the potential demand of return of money a hindrance for the government to auction of the Bitcoins? If anyone demands their money back, and the government agrees, or is forced by a court to pay it back, they can do so without holding BTC in the meantime. Presumably they've made an assessment and come to the conclusion that either the percentage of assets held that belong to customers of SR that said customer may have a claim to is small enough that it's easier/cheaper to deal with that if/when anyone makes a demand than trying to sort it out before auctioning off the BTC. Especially given that presumably very few customers of SR have only bought/sold legal goods, and so presumably most of them won't want to identify themselves.
- thesimpsons1022 12y ago
  there are times when analogies are very helpful.. this isn't one of them. instead of comparing it to that, let's talk about what it actually is. an illegal black market for drugs. you're either being greedy, disingenuous, or crazy if you think their money should be returned. if anything they are lucky the government doesn't pursue the users with legal action.
  - Anderkent 12y ago
    Is having bitcoin on a website illegal, even if you don't buy anything?
    - owenmarshall 12y ago
      The question is irrelevant. The moment I transfer a bitcoin to Silk Road, it's no longer my bitcoin. It's theirs. I've exchanged it for a promise from Silk Road to pass on the bitcoin to someone else or return it to me when I ask. The government never seized my bitcoin. They seized Silk Road's bitcoin. This means Silk Road has more liabilities than assets. And since Silk Road hasn't given me a promissory note in exchange for my bitcoin, I'm an unsecured general creditor - and unsecured general creditors cannot establish standing to recover seized assets.
      - Anderkent 12y ago
        Good point, and I didn't think of that.
    - smsm42 12y ago
      It's not illegal pre se, but if the website is engaged in illegal activity subject to seizure, you may lose your bitcoins, unless you can prove it is not connected to illegal activity.
- nilved 12y ago
  Everybody who used Silk Road knew that the site was illegal, and everybody who used Silk Road willfully paid a commission to Ross. IANAL, but even if you only bought legal goods from Silk Road, you were still aiding and abetting a drug market.
  - logfromblammo 12y ago
    An illegal site... illegal site... Illegal. Site. I'm not sure that I like the sort of thinking that would put those two words together, ever. It would appear as though you think it possible that a flea market should be responsible for the conduct of its buyers and sellers, or that a public bulletin board be responsible for all material posted there. I dislike the idea that a government that nominally prohibits itself from abridging freedom of speech, or of the press, or peaceful assembly could ever declare an information service operating over the Internet to be "illegal", seize all of its assets, shut it down, and then sell off whatever it seized, all without ever establishing any crime or criminal intent to the public. By the same reasoning that led to the seizure and shutdown of Silk Road, since some drug dealers arrange sales with mobile phones, the antennas and backhaul used by the likes of Verizon, Sprint, AT&T et al should be seized, the phone networks shut down, and the equipment auctioned off, all for facilitating prohibited activities. Whether people knew they were committing crimes or not, the site itself was little more than a warehouse building filled with unmonitored flea market stalls, and a common cashier. While the intent of establishing the market was undoubtedly to facilitate commerce in crime and contraband, we still have some expectation that crimes be prosecuted to conviction prior to the application of punishments. What, then, has Silk Road been convicted of? Maintaining a public nuisance? In any sane society, the police would use Silk Road, posing as ordinary customers to collect evidence of crimes, and then prosecute the people that committed them individually. That probably would have eventually resulted in Silk Road becoming more like the semi-legit flea market of Bitcoin, like eBay is for PayPal. What they actually did showed that their actions were targeted at Bitcoin rather than at the drugs. At the time, they did not want Bitcoin to have a common marketplace for goods of any kind, whether contraband or not, and moved to destroy it utterly using the drugs as pretext. If you only bought legal goods from Silk Road, you were not doing anything more than threatening dollar hegemony. And that is why you lost your Bitcoin. Innocent of any crime (except possibly something related to taxes), you suffered a loss, thanks to people trying to enforce one law by breaking another.
- lmm 12y ago
  Once you've paid for an order it isn't your money any more (they're presumably not operating or licensed as a bank). In your clothing example your only recourse would be to sue the clothing store for failing to deliver your clothes (breach of contract or the like). In theory you could do the same thing with Silk Road, but the site operators being anonymous makes that rather difficult. (Of course in practice what you'd do is a credit card chargeback - but bitcoin is specifically designed to make that impossible. If you choose to send an irreversible "currency" to an anonymous recipient, frankly you deserve what you get)
  - aianus 12y ago
    They were 'operating as a bank' in that you had a wallet on the site. The majority of the money seized was not in escrow for drug purchases but sitting in the accounts of the users.
- smackfu 12y ago
  The government would post a notice of the seized assets on www.forfeiture.gov. If you had a claim to some of those assets, for instance that you had already paid for them and they hadn't been delivered, you can submit a petition to get them back. In this case, no one submitted petitions.
throwaway6637 12y ago
But SR was not exclusively for drug sellers. Most of the business there was drugs, obviously, but some amount of that money would have bought legitimate items. So what gives them the right to sell off that money?
- rplnt 12y ago
  Also, if I understand it correctly, many of those coins were not preallocated to any sale. They were just sitting there to be used in the future. So whether they would be used for drugs or something legal is irrelevant.
  - kzrdude 12y ago
    The question still remains, what is the legal basis of confiscating the coins?
    - Cthulhu_ 12y ago
      SR was an illegal drug marketplace - what more legal basis are you expecting?
    - bostonpete 12y ago
      Imagine you hand your local crack dealer a wad of cash to hold for you temporarily. The crack dealer adds it to his bigger wad of cash and promptly gets busted. The drugs and money he's holding are seized. That's what happened here. Would you expect the government to return your wad of cash?
      - stonemetal 12y ago
        If I was buying a pack of gum or a lighter from him, then yes I would.
        owenmarshall 12y ago
        Then you should've filed a claim with the court after: 1) the government filed "US v. A Wad of Cash Found in the Pocket of Danny Drugdealer" 2) the wad of cash was found to be subject to forfeiture 3) Danny Drugdealer didn't contest that he was innocent of drug dealin' or he attempted to and lost 4) The government posted that the wad of cash was subject to forfeiture at www.forfeiture.gov. You'd then be entitled to make the case that ten dollars in Danny Drugdealer's wad of cash actually belonged to you and were not subject to forfeiture. You might've even won! No one filed a claim to block forfeiture of all or part of the Silk Road bitcoins. Not even DPR. I think everyone knows why that is.

by orik 12y ago

rplnt 12y ago

A very stretched example follows, be warned: An online shop selling clothing also happens to sell firearms illegally. Its assets are seized. What about money from pending orders for the clothing? It seems to me it's obvious in this case. Couldn't SR users start a class action lawsuit against gov for seizing their assets stored on SR servers? This is assuming not everything sold there was illegal (this might be wrong).

malka 12y ago
not everything sold here was illegal. However, if I was a SR customer, I would probably not want the gov to know it.
vidarh 12y ago
They could certainly petition the government for the return of money that couldn't be tied to anything illegal. But is the potential demand of return of money a hindrance for the government to auction of the Bitcoins? If anyone demands their money back, and the government agrees, or is forced by a court to pay it back, they can do so without holding BTC in the meantime. Presumably they've made an assessment and come to the conclusion that either the percentage of assets held that belong to customers of SR that said customer may have a claim to is small enough that it's easier/cheaper to deal with that if/when anyone makes a demand than trying to sort it out before auctioning off the BTC. Especially given that presumably very few customers of SR have only bought/sold legal goods, and so presumably most of them won't want to identify themselves.
thesimpsons1022 12y ago
there are times when analogies are very helpful.. this isn't one of them. instead of comparing it to that, let's talk about what it actually is. an illegal black market for drugs. you're either being greedy, disingenuous, or crazy if you think their money should be returned. if anything they are lucky the government doesn't pursue the users with legal action.
- Anderkent 12y ago
  Is having bitcoin on a website illegal, even if you don't buy anything?
  - owenmarshall 12y ago
    The question is irrelevant. The moment I transfer a bitcoin to Silk Road, it's no longer my bitcoin. It's theirs. I've exchanged it for a promise from Silk Road to pass on the bitcoin to someone else or return it to me when I ask. The government never seized my bitcoin. They seized Silk Road's bitcoin. This means Silk Road has more liabilities than assets. And since Silk Road hasn't given me a promissory note in exchange for my bitcoin, I'm an unsecured general creditor - and unsecured general creditors cannot establish standing to recover seized assets.
    - Anderkent 12y ago
      Good point, and I didn't think of that.
  - smsm42 12y ago
    It's not illegal pre se, but if the website is engaged in illegal activity subject to seizure, you may lose your bitcoins, unless you can prove it is not connected to illegal activity.
nilved 12y ago
Everybody who used Silk Road knew that the site was illegal, and everybody who used Silk Road willfully paid a commission to Ross. IANAL, but even if you only bought legal goods from Silk Road, you were still aiding and abetting a drug market.
- logfromblammo 12y ago
  An illegal site... illegal site... Illegal. Site. I'm not sure that I like the sort of thinking that would put those two words together, ever. It would appear as though you think it possible that a flea market should be responsible for the conduct of its buyers and sellers, or that a public bulletin board be responsible for all material posted there. I dislike the idea that a government that nominally prohibits itself from abridging freedom of speech, or of the press, or peaceful assembly could ever declare an information service operating over the Internet to be "illegal", seize all of its assets, shut it down, and then sell off whatever it seized, all without ever establishing any crime or criminal intent to the public. By the same reasoning that led to the seizure and shutdown of Silk Road, since some drug dealers arrange sales with mobile phones, the antennas and backhaul used by the likes of Verizon, Sprint, AT&T et al should be seized, the phone networks shut down, and the equipment auctioned off, all for facilitating prohibited activities. Whether people knew they were committing crimes or not, the site itself was little more than a warehouse building filled with unmonitored flea market stalls, and a common cashier. While the intent of establishing the market was undoubtedly to facilitate commerce in crime and contraband, we still have some expectation that crimes be prosecuted to conviction prior to the application of punishments. What, then, has Silk Road been convicted of? Maintaining a public nuisance? In any sane society, the police would use Silk Road, posing as ordinary customers to collect evidence of crimes, and then prosecute the people that committed them individually. That probably would have eventually resulted in Silk Road becoming more like the semi-legit flea market of Bitcoin, like eBay is for PayPal. What they actually did showed that their actions were targeted at Bitcoin rather than at the drugs. At the time, they did not want Bitcoin to have a common marketplace for goods of any kind, whether contraband or not, and moved to destroy it utterly using the drugs as pretext. If you only bought legal goods from Silk Road, you were not doing anything more than threatening dollar hegemony. And that is why you lost your Bitcoin. Innocent of any crime (except possibly something related to taxes), you suffered a loss, thanks to people trying to enforce one law by breaking another.
lmm 12y ago
Once you've paid for an order it isn't your money any more (they're presumably not operating or licensed as a bank). In your clothing example your only recourse would be to sue the clothing store for failing to deliver your clothes (breach of contract or the like). In theory you could do the same thing with Silk Road, but the site operators being anonymous makes that rather difficult. (Of course in practice what you'd do is a credit card chargeback - but bitcoin is specifically designed to make that impossible. If you choose to send an irreversible "currency" to an anonymous recipient, frankly you deserve what you get)
- aianus 12y ago
  They were 'operating as a bank' in that you had a wallet on the site. The majority of the money seized was not in escrow for drug purchases but sitting in the accounts of the users.
smackfu 12y ago
The government would post a notice of the seized assets on www.forfeiture.gov. If you had a claim to some of those assets, for instance that you had already paid for them and they hadn't been delivered, you can submit a petition to get them back. In this case, no one submitted petitions.

throwaway6637 12y ago

But SR was not exclusively for drug sellers. Most of the business there was drugs, obviously, but some amount of that money would have bought legitimate items. So what gives them the right to sell off that money?

rplnt 12y ago
Also, if I understand it correctly, many of those coins were not preallocated to any sale. They were just sitting there to be used in the future. So whether they would be used for drugs or something legal is irrelevant.
- kzrdude 12y ago
  The question still remains, what is the legal basis of confiscating the coins?
  - Cthulhu_ 12y ago
    SR was an illegal drug marketplace - what more legal basis are you expecting?
  - bostonpete 12y ago
    Imagine you hand your local crack dealer a wad of cash to hold for you temporarily. The crack dealer adds it to his bigger wad of cash and promptly gets busted. The drugs and money he's holding are seized. That's what happened here. Would you expect the government to return your wad of cash?
    - stonemetal 12y ago
      If I was buying a pack of gum or a lighter from him, then yes I would.
      - owenmarshall 12y ago
        Then you should've filed a claim with the court after: 1) the government filed "US v. A Wad of Cash Found in the Pocket of Danny Drugdealer" 2) the wad of cash was found to be subject to forfeiture 3) Danny Drugdealer didn't contest that he was innocent of drug dealin' or he attempted to and lost 4) The government posted that the wad of cash was subject to forfeiture at www.forfeiture.gov. You'd then be entitled to make the case that ten dollars in Danny Drugdealer's wad of cash actually belonged to you and were not subject to forfeiture. You might've even won! No one filed a claim to block forfeiture of all or part of the Silk Road bitcoins. Not even DPR. I think everyone knows why that is.