Big mistake

About that $1 billion. Also, 7 other things worth your time.

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Life comes at you pretty fast. For example, in yesterday’s newsletter, I linked to a story about how almost $1 billion in Bitcoin disappeared without a trace, from an online wallet.

“By definition,” I added confidently yesterday, since it was Bitcoin, “we’ll almost certainly never know anything more about it.”

Guess what? Not even 24 hours later, we know a lot more about it.

On Thursday, the U.S. Department of Justice announced that it had seized more than $1 billion in Bitcoin, associated with the 2015 prosecution of the dark web marketplace, Silk Road.

The amount, and more importantly the account number — “1HQ3Go3ggs8pFnXuHVHRytPCq5fGG8Hbhx” — match up to what was described in yesterday’s story.

DOJ calls the account “1HQ3” for short, so we’ll do the same here. Also, sharp eyed readers will note that “almost $1 billion” is not the same as “more than $1 billion;” more on that in a second.

First, just quick background: If you don’t know the story of Silk Road, and how its founder, Ross Ulbricht, was captured, it’s fascinating and tragic.

Silk Road was an underground Internet marketplace to buy and sell all kinds of drugs and other illegal contraband. The government says that led to even more depravity, up to and including murder-for-hire.

As for Ulbricht himself, I pity the guy; everything I’ve read suggests he was both super-smart, and wildly misguided. Now, he’s now 36 years old and doing two life sentences plus 40 years without parole. Man, what a waste of a life.

Also, despite supposedly being a criminal mastermind, he was caught (partly) because of an incredibly dumb mistake—using his personal gmail address on an online message board when he was setting up Silk Road.

Anyway, two more details:

The first is how the government says it connected the $1 billion to Silk Road. In short, back in 2012, someone it refers to as “Individual X” in court documents hacked into Silk Road itself, and stole the money.

According to Justice, “Ulbricht became aware of Individual X’s online identity and threatened Individual X for return of the cryptocurrency … Individual X did not return the cryptocurrency but kept it and did not spend it.”

The Justice complaint doesn’t quite spell it out, but I’d hazard a guess that maybe Individual X has now been arrested for some other crime, and he or she gave up the Bitcoin as part of a deal.

The second detail? It has to do with that “almost $1 billion” versus “more than $1 billion.”

  • Back in 2012, when Individual X allegedly stole the money from Silk Road, the Bitcoin was worth a total of about $354,000.

  • In 2013, when Individual X dropped the bitcoin into “1HQ3,” it was worth $14 million.

  • When it was withdrawn from the wallet less than a week ago? $960 million.

  • And then yesterday? More than $1 billion, according to Justice.

All of which means that if Ulbricht, the supposed genius who built an entire illegal marketplace that ran on Bitcoin, had instead just focused on Bitcoin itself, he might have been a very wealthy person, today.

Instead, he’s in a federal maximum security prison, for life. Big mistake.


7 other things worth your time

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