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Topic: [2014-01-31] Forbes - Silk Road Vendor Filing Claim For Seized Bitcoins (Read 2639 times)

donator
Activity: 1218
Merit: 1079
Gerald Davis
Shouldn't they claim it BEFORE the forfeiture order is made? They have more than 2 months to make the claim. The court made the forfeiture order because no one claimed the bitcoin. Isn't it too late now?

I am not sure.  I am not a laywer (I would image the person in the article obtained counsel).

The govt would not appear to have followed its own procedures:
http://www.law.cornell.edu/uscode/text/18/983

The DOJ should have provided written notice to all parties more than 30 days before the forfeiture and thus provide an opportunity to fiile a claim.  If they didn't (and I don't think they did) then that might (no I have no interest in reading those pages of statute) give certain rights for a late claim.

On edit:
Quote
(e) Motion To Set Aside Forfeiture.—
(1) Any person entitled to written notice in any nonjudicial civil forfeiture proceeding under a civil forfeiture statute who does not receive such notice may file a motion to set aside a declaration of forfeiture with respect to that person’s interest in the property, which motion shall be granted if—
(A) the Government knew, or reasonably should have known, of the moving party’s interest and failed to take reasonable steps to provide such party with notice; and
(B) the moving party did not know or have reason to know of the seizure within sufficient time to file a timely claim.

So it looks like in some cases, one can file not a claim but an attempt to set aside the forfeiture (and thus allow a claim as it is if the forfeiture never happened).
hero member
Activity: 926
Merit: 1001
weaving spiders come not here

Oh, I agree completely. That said, we have reality to contend with. I stand by my beliefs on how the US government will defend against this claim. I certainly hope to be eating crow and admitting I was wrong, but seriously, knowing the US government, do you really doubt they will act this way?

There is a huge difference between "how it should be" and "how it is."
hero member
Activity: 926
Merit: 1001
weaving spiders come not here
This is where it gets interesting. This man was in the UK and his dominant market was the EU.

As far as I know the sale of drug paraphenalia is not prohibited in the UK I'm no lawyer however and his business was registered and fully tax-compliant.

Why would US law apply to this?
Why would the US have grounds to seize assets from a legal UK business just because said business is illegal in the US?

(hypothetically) If the reason for the seizure is that its illegal for a non-us citizen to export these products to the US - even though it's perfectly legal to "export" drugs to the US from certain countries, it is however illegal for the other party to "import" them - then shouldn't the burden of proof be put on the US authorities to prove that all of the $95k were proceeds from exporting goods to the US? I don't think they have the right to just seize the whole lot. Thats like the US seizing my bank accounts and house for exporting a $0.50 packet of rolling papers to the US, they should have to account for the amount that were illegal proceeds.

About the $95k figure, PlutoPete was a mega-seller - in the top 100 on SR by sales volume and he was a seller on SR for many years. The funds were also worth 9x less at the time of seizure as mentioned.

Fruit of the poison tree. Silk Road was unlawful from the get-go. The vendor was a part of the mechanism that allowed Silk Road to commit crime and profit. Does not help that vendor sold drug novelty and usage items to users in a drug market where there is a high likelihood they would use them with the other drugs they purchased there. The jump is a baby step.

What they want does not pass the normal rational person test.

I do not think it means what you think it means.
http://en.wikipedia.org/wiki/Fruit_of_the_poisonous_tree

As long as Silk Road allowed 100% legal worldwide items, any lawful seller is only guilty by association, which is an indefensible totalitarian term. How long until every lawful seller on craigslist needs to fear prosecution for guilt by association, then?

Thanks for the correction on the poison tree. I meant to show a solid connection and mutually beneficial business relationship between vendor and Silk Road.

It's much more than guilt by association. It's connected businesses working at an illegal marketplace who could not exist without mutual benefit for illegal profit. Said profits from all vendors were used to support every facet of this illegal marketplace from inception to seizure. Every Bitcoin connected is unlawful proceeds.

Craigslist is legal. Silk Road was not. I stand by my opinions on how the government will act in defense of this claim.
legendary
Activity: 1792
Merit: 1111
Shouldn't they claim it BEFORE the forfeiture order is made? They have more than 2 months to make the claim. The court made the forfeiture order because no one claimed the bitcoin. Isn't it too late now?

p.s. DPR's personal coins are not (yet) forfeited because he made a claim
legendary
Activity: 3038
Merit: 1032
RIP Mommy
This is where it gets interesting. This man was in the UK and his dominant market was the EU.

As far as I know the sale of drug paraphenalia is not prohibited in the UK I'm no lawyer however and his business was registered and fully tax-compliant.

Why would US law apply to this?
Why would the US have grounds to seize assets from a legal UK business just because said business is illegal in the US?

(hypothetically) If the reason for the seizure is that its illegal for a non-us citizen to export these products to the US - even though it's perfectly legal to "export" drugs to the US from certain countries, it is however illegal for the other party to "import" them - then shouldn't the burden of proof be put on the US authorities to prove that all of the $95k were proceeds from exporting goods to the US? I don't think they have the right to just seize the whole lot. Thats like the US seizing my bank accounts and house for exporting a $0.50 packet of rolling papers to the US, they should have to account for the amount that were illegal proceeds.

About the $95k figure, PlutoPete was a mega-seller - in the top 100 on SR by sales volume and he was a seller on SR for many years. The funds were also worth 9x less at the time of seizure as mentioned.

Fruit of the poison tree. Silk Road was unlawful from the get-go. The vendor was a part of the mechanism that allowed Silk Road to commit crime and profit. Does not help that vendor sold drug novelty and usage items to users in a drug market where there is a high likelihood they would use them with the other drugs they purchased there. The jump is a baby step.

What they want does not pass the normal rational person test.

I do not think it means what you think it means.
http://en.wikipedia.org/wiki/Fruit_of_the_poisonous_tree

As long as Silk Road allowed 100% legal worldwide items, any lawful seller is only guilty by association, which is an indefensible totalitarian term. How long until every lawful seller on craigslist needs to fear prosecution for guilt by association, then?
sr. member
Activity: 280
Merit: 250
I hope he win too.  Smiley
newbie
Activity: 42
Merit: 0
The vendor was a part of the mechanism that allowed Silk Road to commit crime and profit.

A very interesting argument but one could argue that a lot of other people/things were part of the mechanism that allowed SR to commit crime and make profit.

Why don't they go after the hosting company, what about the people who wrote the operating system and web server software that allowed them to distribute the website?
What about the hardware manufacturers such as Apple who's devices allowed users to make the purchases? If it wasn't for those people SR would not have been able to commit crime or make profit.

Does not help that vendor sold drug novelty and usage items to users in a drug market where there is a high likelihood they would use them with the other drugs they purchased there.

I'm not sure it's illegal to sell something that has a high probability to be used illegally. By that logic the US should make guns illegal because they have a high probability to be used to commit murder. Considering research shows that approximately 50% of internet traffic is pirated material they should also ban the internet.

And is it the vendors job to ensure that the business he is working with is not allowing criminal activity?

For example, eBay. What if eBay allowed drugs to be sold tomorrow? Is it my job as a vendor on eBay to ensure that they are not allowing illegal transactions to happen? So my money from legal sales could be seized if eBay were allowing drug sales?

eBay allow the sale of drug paraphenalia btw. Atleast on ebay.co.uk
hero member
Activity: 926
Merit: 1001
weaving spiders come not here
This is where it gets interesting. This man was in the UK and his dominant market was the EU.

As far as I know the sale of drug paraphenalia is not prohibited in the UK I'm no lawyer however and his business was registered and fully tax-compliant.

Why would US law apply to this?
Why would the US have grounds to seize assets from a legal UK business just because said business is illegal in the US?

(hypothetically) If the reason for the seizure is that its illegal for a non-us citizen to export these products to the US - even though it's perfectly legal to "export" drugs to the US from certain countries, it is however illegal for the other party to "import" them - then shouldn't the burden of proof be put on the US authorities to prove that all of the $95k were proceeds from exporting goods to the US? I don't think they have the right to just seize the whole lot. Thats like the US seizing my bank accounts and house for exporting a $0.50 packet of rolling papers to the US, they should have to account for the amount that were illegal proceeds.

About the $95k figure, PlutoPete was a mega-seller - in the top 100 on SR by sales volume and he was a seller on SR for many years. The funds were also worth 9x less at the time of seizure as mentioned.

Fruit of the poison tree. Silk Road was unlawful from the get-go. The vendor was a part of the mechanism that allowed Silk Road to commit crime and profit. Does not help that vendor sold drug novelty and usage items to users in a drug market where there is a high likelihood they would use them with the other drugs they purchased there. The jump is a baby step.

What they want does not pass the normal rational person test.
newbie
Activity: 42
Merit: 0
This is where it gets interesting. This man was in the UK and his dominant market was the EU.

As far as I know the sale of drug paraphenalia is not prohibited in the UK I'm no lawyer however and his business was registered and fully tax-compliant.

Why would US law apply to this?
Why would the US have grounds to seize assets from a legal UK business just because said business is illegal in the US?

(hypothetically) If the reason for the seizure is that its illegal for a non-us citizen to export these products to the US - even though it's perfectly legal to "export" drugs to the US from certain countries, it is however illegal for the other party to "import" them - then shouldn't the burden of proof be put on the US authorities to prove that all of the $95k were proceeds from exporting goods to the US? I don't think they have the right to just seize the whole lot. Thats like the US seizing my bank accounts and house for exporting a $0.50 packet of rolling papers to the US, they should have to account for the amount that were illegal proceeds.

About the $95k figure, PlutoPete was a mega-seller - in the top 100 on SR by sales volume and he was a seller on SR for many years. The funds were also worth 9x less at the time of seizure as mentioned.
legendary
Activity: 1039
Merit: 1005
legendary
Activity: 1232
Merit: 1195
http://www.gpo.gov/fdsys/pkg/USCODE-2010-title21/html/USCODE-2010-title21-chap13-subchapI-partD-sec863.htm

Quote
21 U.S.C.
United States Code, 2010 Edition
Title 21 - FOOD AND DRUGS
CHAPTER 13 - DRUG ABUSE PREVENTION AND CONTROL
SUBCHAPTER I - CONTROL AND ENFORCEMENT
Part D - Offenses and Penalties
Sec. 863 - Drug paraphernalia
From the U.S. Government Printing Office, www.gpo.gov

§863. Drug paraphernalia
(a) In general
It is unlawful for any person—
(1) to sell or offer for sale drug paraphernalia;
(2) to use the mails or any other facility of interstate commerce to transport drug paraphernalia; or
(3) to import or export drug paraphernalia.
(b) Penalties
Anyone convicted of an offense under subsection (a) of this section shall be imprisoned for not more than three years and fined under title 18.
(c) Seizure and forfeiture
Any drug paraphernalia involved in any violation of subsection (a) of this section shall be subject to seizure and forfeiture upon the conviction of a person for such violation. Any such paraphernalia shall be delivered to the Administrator of General Services, General Services Administration, who may order such paraphernalia destroyed or may authorize its use for law enforcement or educational purposes by Federal, State, or local authorities.
(d) “Drug paraphernalia” defined
The term “drug paraphernalia” means any equipment, product, or material of any kind which is primarily intended or designed for use in manufacturing, compounding, converting, concealing, producing, processing, preparing, injecting, ingesting, inhaling, or otherwise introducing into the human body a controlled substance, possession of which is unlawful under this subchapter. It includes items primarily intended or designed for use in ingesting, inhaling, or otherwise introducing marijuana,1 cocaine, hashish, hashish oil, PCP, methamphetamine, or amphetamines into the human body, such as—
(1) metal, wooden, acrylic, glass, stone, plastic, or ceramic pipes with or without screens, permanent screens, hashish heads, or punctured metal bowls;
(2) water pipes;
(3) carburetion tubes and devices;
(4) smoking and carburetion masks;
(5) roach clips: meaning objects used to hold burning material, such as a marihuana cigarette, that has become too small or too short to be held in the hand;
(6) miniature spoons with level capacities of one-tenth cubic centimeter or less;
(7) chamber pipes;
(Cool carburetor pipes;
(9) electric pipes;
(10) air-driven pipes;
(11) chillums;
(12) bongs;
(13) ice pipes or chillers;
(14) wired cigarette papers; or
(15) cocaine freebase kits.
(e) Matters considered in determination of what constitutes drug paraphernalia
In determining whether an item constitutes drug paraphernalia, in addition to all other logically relevant factors, the following may be considered:
(1) instructions, oral or written, provided with the item concerning its use;
(2) descriptive materials accompanying the item which explain or depict its use;
(3) national and local advertising concerning its use;
(4) the manner in which the item is displayed for sale;
(5) whether the owner, or anyone in control of the item, is a legitimate supplier of like or related items to the community, such as a licensed distributor or dealer of tobacco products;
(6) direct or circumstantial evidence of the ratio of sales of the item(s) to the total sales of the business enterprise;
(7) the existence and scope of legitimate uses of the item in the community; and
(Cool expert testimony concerning its use.
(f) Exemptions
This section shall not apply to—
(1) any person authorized by local, State, or Federal law to manufacture, possess, or distribute such items; or
(2) any item that, in the normal lawful course of business, is imported, exported, transported, or sold through the mail or by any other means, and traditionally intended for use with tobacco products, including any pipe, paper, or accessory.

Laws are bizarre sometimes. Isn't weed legal in many states now, but drug paraphernalia isn't?
hero member
Activity: 926
Merit: 1001
weaving spiders come not here
http://www.gpo.gov/fdsys/pkg/USCODE-2010-title21/html/USCODE-2010-title21-chap13-subchapI-partD-sec863.htm

Quote
21 U.S.C.
United States Code, 2010 Edition
Title 21 - FOOD AND DRUGS
CHAPTER 13 - DRUG ABUSE PREVENTION AND CONTROL
SUBCHAPTER I - CONTROL AND ENFORCEMENT
Part D - Offenses and Penalties
Sec. 863 - Drug paraphernalia
From the U.S. Government Printing Office, www.gpo.gov

§863. Drug paraphernalia
(a) In general
It is unlawful for any person—
(1) to sell or offer for sale drug paraphernalia;
(2) to use the mails or any other facility of interstate commerce to transport drug paraphernalia; or
(3) to import or export drug paraphernalia.
(b) Penalties
Anyone convicted of an offense under subsection (a) of this section shall be imprisoned for not more than three years and fined under title 18.
(c) Seizure and forfeiture
Any drug paraphernalia involved in any violation of subsection (a) of this section shall be subject to seizure and forfeiture upon the conviction of a person for such violation. Any such paraphernalia shall be delivered to the Administrator of General Services, General Services Administration, who may order such paraphernalia destroyed or may authorize its use for law enforcement or educational purposes by Federal, State, or local authorities.
(d) “Drug paraphernalia” defined
The term “drug paraphernalia” means any equipment, product, or material of any kind which is primarily intended or designed for use in manufacturing, compounding, converting, concealing, producing, processing, preparing, injecting, ingesting, inhaling, or otherwise introducing into the human body a controlled substance, possession of which is unlawful under this subchapter. It includes items primarily intended or designed for use in ingesting, inhaling, or otherwise introducing marijuana,1 cocaine, hashish, hashish oil, PCP, methamphetamine, or amphetamines into the human body, such as—
(1) metal, wooden, acrylic, glass, stone, plastic, or ceramic pipes with or without screens, permanent screens, hashish heads, or punctured metal bowls;
(2) water pipes;
(3) carburetion tubes and devices;
(4) smoking and carburetion masks;
(5) roach clips: meaning objects used to hold burning material, such as a marihuana cigarette, that has become too small or too short to be held in the hand;
(6) miniature spoons with level capacities of one-tenth cubic centimeter or less;
(7) chamber pipes;
(Cool carburetor pipes;
(9) electric pipes;
(10) air-driven pipes;
(11) chillums;
(12) bongs;
(13) ice pipes or chillers;
(14) wired cigarette papers; or
(15) cocaine freebase kits.
(e) Matters considered in determination of what constitutes drug paraphernalia
In determining whether an item constitutes drug paraphernalia, in addition to all other logically relevant factors, the following may be considered:
(1) instructions, oral or written, provided with the item concerning its use;
(2) descriptive materials accompanying the item which explain or depict its use;
(3) national and local advertising concerning its use;
(4) the manner in which the item is displayed for sale;
(5) whether the owner, or anyone in control of the item, is a legitimate supplier of like or related items to the community, such as a licensed distributor or dealer of tobacco products;
(6) direct or circumstantial evidence of the ratio of sales of the item(s) to the total sales of the business enterprise;
(7) the existence and scope of legitimate uses of the item in the community; and
(Cool expert testimony concerning its use.
(f) Exemptions
This section shall not apply to—
(1) any person authorized by local, State, or Federal law to manufacture, possess, or distribute such items; or
(2) any item that, in the normal lawful course of business, is imported, exported, transported, or sold through the mail or by any other means, and traditionally intended for use with tobacco products, including any pipe, paper, or accessory.
legendary
Activity: 1232
Merit: 1195
Sounds like he has somewhat of a valid argument,  but from what I understand selling things like bongs online to Americans is still illegal for the most part. Hence why you don't see many sites offering them to American customers.  So unless he has good records showing which sales went to which countries, good luck.

Selling bongs is illegal in the states? And I'm not sure if he shipped much stuff stateside.
sr. member
Activity: 364
Merit: 250
Sounds like he has somewhat of a valid argument,  but from what I understand selling things like bongs online to Americans is still illegal for the most part. Hence why you don't see many sites offering them to American customers.  So unless he has good records showing which sales went to which countries, good luck.
global moderator
Activity: 3990
Merit: 2717
Join the world-leading crypto sportsbook NOW!
For those confused by the $95K number.  Pull up a year long Bitcoin chart.  Lookup exchange rate at the time the silk road was closed.   Multiply that by 1000.  It isn't $95K.
Oh, yeah, that makes sense.  I wonder if he kept all of his revenue on SR or if he has a bigger stash offline.

He was pretty silly to keep all that online if he did.
hero member
Activity: 854
Merit: 1000
For those confused by the $95K number.  Pull up a year long Bitcoin chart.  Lookup exchange rate at the time the silk road was closed.   Multiply that by 1000.  It isn't $95K.
Oh, yeah, that makes sense.  I wonder if he kept all of his revenue on SR or if he has a bigger stash offline.
donator
Activity: 1218
Merit: 1079
Gerald Davis
For those confused by the $95K number.  Pull up a year long Bitcoin chart.  Lookup exchange rate at the time the silk road was closed.   Multiply that by 1000.  It isn't $95K.
hero member
Activity: 854
Merit: 1000
http://www.forbes.com/sites/andygreenberg/2014/01/31/silk-road-vendor-filing-claim-for-seized-bitcoins-argues-he-sold-only-legal-items/

Quote
On Thursday, Ward began the process of retaining a lawyer to file a claim for what he says were 100 bitcoins–worth around $95,000 at current exchange rates–seized by the FBI in the takedown of the Silk Road online black market for drugs last October. Unlike most of Silk Road’s sellers, Ward says he earned his bitcoins through entirely legal means, offering the same merchandise that he advertises on the public Internet from his head shop Planet Pluto in Devon, England.

There were many legal sellers on Silk Road. I had money on deposit on SR at the time of the seizure for coin mixing purposes as the SR mixer was huge and provided a pretty good protection against taint analysis for the cost of transaction fees only. If my deposit was worth more I'd be doing the same thing.

Go PlutoPete! I'm so happy that it's him who decided to fight this. For those who don't know, PlutoPete was well known on SR he sold pipes, papers and bongs and had written before about how he registered his Silk Road business with tax authorities in the UK.

Also interesting:

Quote
All of that means the FBI, who were in communication with the NCA, should have considered Ward’s claim to some of the Silk Road bitcoins, according to Steven L. Kessler, an asset forfeiture lawyer who Ward is in the process of retaining. “The statute requires that if the government of the United States has knowledge of an individual with an asset subject to forfeiture, the owner has to get notice,” says Kessler.
This is going to be a fun argument to hear.  How many bongs did he sell to get $95k in revenue?
global moderator
Activity: 3990
Merit: 2717
Join the world-leading crypto sportsbook NOW!
$95,000? That's a lot of bongs and papers  Grin. Good on him for taking this all the way. It'll be interesting to see the result. Has their been any update on DPRs seized coins?
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