Topic: US Department of Justice announces historical BTC seizure (Silk Road related) - page 2. (Read 379 times)

The wheels of justice move slowly but they will eventually run you over.
Always wondered what would happen in a case like this, if the total opposite happened. If instead of BTC it was some token that became worthless but before everything else came crashing down.
Would governments and enforcement spend the time and effort going after someone who stole $500000 that is now worth $1 or would they just let it slide.

Due to the Silk Road relationship I can see them going after it no matter what, but who knows.

-Dave

Yep, that’s always a mess. In fact, I mixed both wrongly in the OP, since I wrote it first in Spanish and then thought about changing it here to US format, leading to a separator cockup (now fixed).

I was giving it a thought, and came to a similar hypothesis to this guy:
See: https://twitter.com/moo9000/status/1589631175693594624

It’s more or less what I had in mind. Since the withdrawal speed was referenced (i.e. 5 DB TXs in 1 second in the example provided in the OP), there must have been an error handling the database TX, or rather, the lack off, leading to a non-atomic db update of various lines of code that should have been encapsulated in a TX. I also thought the code might have been doing dirty reads (another option) in order to reduce lock time, which could read data in an incomplete state.

MySQL did have TXs at the time, so assuming that was the RDBMS used, it’s a programming error or a lack of expertise in DBs.

i.e.
If I were to execute (pseudocode for illustration purposes):
The two lines of pseudocode enclosed in the begin/end structure are not atomic, since they are not enclosed within a TX (begin transaction/end transaction). One could, perhaps, trigger the code multiple times (from different petitions) and get multiple sends executed before the first balance update takes place, leading to multiple 500 BTC sends.

It’s also possible that the actual Send BTC may have been a call to some function in the code that was relatively slow, and non DB related, thus not being able to conform part of a DB TX strictly speaking.

In legal terms (to me), the bitcoins belong to Silk Road since it has been extracted from there. To be fair both cases should be tied but of course, they won't return the bitcoins to Ulbricht  

Usually, the government makes an auction, I don't think it will be different in this case. It's then redistributed to different agencies or used to reimburse victims of fraud. The victim here won't receive a penny.

Need to remind myself some countries use the full stop point not as a decimal but as a thousands separator haha.

Surprised I'd never heard of this particular story, for such a large amount of BTC (yes, it's a drop in the ocean but it's still a relatively crazy amount to hold for an individual).

Not so technical so I don't get it, was the loophole Silk Road's? They weren't processing from wallets but manually?

The DOJ is now formally the custodian of a massive BTC seizure, totalling around 51.351 BTCs, which were previously in the hands of James Zhong. The largest chunk was apprehended around a year ago, but Zhong has made a couple of subsequent deliveries to the DOJ, possibly to try to have a better outcome in the sentence.

The DOJ’s release notice states in their headline having seized an equivalent of 3,36 billon $ in crypto, though it was countervalued around a year ago, and today it’s probably closer to 1,05 billion $ or such.

The story is interesting to read. It seems that Zhong obtained the massive amount of BTCs by cheating Silk Road, committing wire fraud in the process. Zhong did not actually buy or sell from the accounts he created on Silk Road, but he did manage to scam the site through them.

How did he do it? Well, in a pretty absurd manner: generating over 140 withdraws TXs to retrieve BTCs he’d previously credited on his accounts in bursts of rapid sequences. The below notice provides an example where by Zhong deposited 500 BTCs, and less than 5 seconds later, managed to make 5 consecutive withdrawals against that deposit for the total amount, all five withdrawal TXs executed in under a second. All in all, this loophole allowed him to withdraw 2500 BTCs from a 500 BTC deposit. Rinse and repeat until you manage to scam the site from over 51K BTCs.

At the time of the depicted events, BTC was around 10$ to 12$. That means that the amount defrauded back then was not insignificant, and already in the range of around hald a million dollars (give or take – we don’t know exactly how much was his to begin with).

A decade later, he has pleaded guilty to wire fraud, and should have a sentence by February 2023 (max. 20 years it seems).

I wonder what the DOJ is going to do with the BTCs though. In prior instances they’ve been auctioned, though that is yet something to be seen in this case (I doubt that they’ll end-up forming part of the Silk Road compensation plans, even as a late additions, simply because they are really two separate cases).


See: https://www.justice.gov/usao-sdny/pr/us-attorney-announces-historic-336-billion-cryptocurrency-seizure-and-conviction

Note: '.' thousands separator ',' decimal separator