Bitcoin Exchanges Subpoenaed Over Silk Road Related Transactions

Now who didn't see that coming? (especially after Bitinstant)

The new focus of the investigation is the latest indication of how the shuttered online drug market has become linked to bitcoin, tainting the currency with associations of shady activity as its advocates stress to regulators its legitimacy. It comes after prosecutors in January criminally charged the owner of one bitcoin exchange over alleged ties to Silk Road.

http://online.wsj.com/news/articles/SB10001424052702304422704579570132275301414?mg=reno64-wsj&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB10001424052702304422704579570132275301414.html

EDIT: The WSJ suddenly started to require login, so i reposted the article here:

http://www.deepdotweb.com/2014/05/20/bitcoin-exchanges-subpoenaed-silk-road-related-transactions/


Comments


[22 Points] None:

Man this kinda shit annoys me:

"Exchanging other currencies into bitcoin with the knowledge that the funds would be used for illegal transactions could violate money-laundering laws. Even without such direct knowledge, financial institutions are required under U.S. bank regulations to maintain robust internal controls to prevent money laundering by customers."

So shouldn't we punish banks when drug dealers use cash? Should known dealers be allowed to use cash? The same logic applies, but that will never happen because the banks are the government.


[16 Points] Dunavo:

Dollars are used to buy drugs. We should burn those too.


[11 Points] swa_t:

I am so sick of this "drug war"... holy fuck. I feel like I'm living in the book 1984.


[9 Points] tokey_ucm:

Buying bitcoins is not illegal. the feds are going to have to prove that whoever bought the coin also bought drugs. if you've done your tumbling and everything correctly, you should be safe. even by subpoenaing all the records, they still won't be able to prove exactly where the bitcoins went, let alone what they were used for.

good luck FBI.


[8 Points] serotonindeplete:

Any word on the exact exchanges subpoenaed? That is very important information for some.


[4 Points] None:

[deleted]


[6 Points] queryox1:

god damn obama


[3 Points] andrelayer:

And this is why something like DarkCoin has a place, and an important one at that.


[2 Points] Plead_Ignorance:

This is why I prefer localbitcoins. Deposit some money into a persons bank account. Never have to present ID, state your name, nothing. Completely anonymous aside from security cams.


[2 Points] InfinitelyOutThere:

Complete bullshit, and the feds know it. The things they're trying to nail bitcoin with are the same failings of paper currency. The hypocrisy is sickening.


[2 Points] Vendor_BBMC:

Don't forget that the Feds have the Silk Road server, and in September they withdrew everybody's bitcoins from it. In fact, they kept setting up auto withdraw to their own wallets the week before the banner went up.

I thought I was going nuts, and kept unticking the box or putting my own wallets in!

Everyone seems to love Ross, but we still lost our bitcoins, and if a vendor is using the same name, wallets or PGP key, he's probably having his annual earnings estimated before being arrested.

I don't imagine the thousands of vendors worldwide will be arrested until after Ross' trial, but if you kept ANYTHING to connect you to your account on the Silk Road server, you have good reason to be worried.

I'm sure everyone already knows this, but it's worth restating. They have the server, its password list, sales records, drug photos, emails, withdrawal addresses - everything.

They can see every withdrawal by every vendor to his own wallet, then on to an exchange.

If they see 10,000 butcoins going into bitcoin fog, they can follow their routes through to be reassembled 6 hours later.

If a vendor puts 1 bitcoin through, bitcoin fog tumbles a bitcoin deposited by another customer last week instead of yours.

This is unbeatable.


[2 Points] farmer1wastaken:

I am surprised that no one has mentioned the hedging feature on SR yet. Just how was SR able to do that?

SR held their profits in bitcoin and exchanged a portion of the btc to dollars on Gox when someone made a purchase from a hedged vendor. When the buyer finalized the order SR sold these dollars back for bitcoins. SR had to hold an amount of bitcoins on Gox equal to the max amount of value they might have in hedged escrow at any one time.

These coins might be of great interest to the feds. They may also explain some of Mark K's behavior. I don't doubt that the feds found the SR server to be automatically trading via the Gox API.