In October 2013, Ross Ulbricht was arrested for allegedly being the man behind the website, Silk Road, which has been the source of large-scale illegal drug trafficking. In the process of arresting Ulbricht, the federal government seized 173,000 bitcoins owned by the Silk Road, which was valued at approximately $33.6 million.
The man behind the Silk Road website went by the alias “Dread Pirate Roberts,” which led to him being referred to as the Silk Road Pirate. While, at first, Ulbricht denied being connected to the Silk Road, he recently admitted to being the owner. Further, in a statement released on December 11, 2013, Ulbricht insists the bitcoins must be returned because they were not subject to seizure under law.
The bitcoins were seized as an asset used to aid in money laundering, drug sales, and murder-for-hire plots. Ulbricht is arguing bitcoins are not a recognized asset, which makes them ineligible for seizure. This means the government will have to prove they are an asset in order to maintain their possession of them.
Daniel Wenner, the former Brooklyn assistant US attorney, stated that Ulbricht’s argument was “very creative and cutting edge.” However, he went on to say, “I think one would be hard-pressed to convince a court that something you can use to purchase goods, like bitcoins, isn’t property.”
Jeffrey Alberts, a former asset-forfeiture action attorney, supported Wenner’s statements saying, “Artwork, horses and even intellectual property, such as domain names, have qualified, so there’s no reason to think bitcoins wouldn’t.”
It is unclear how Ulbricht expects to benefit from this change. It seems clear the bitcoins will not be returned, and he effectively admitted he is guilty. Despite the negative effect this may have on Ulbricht, it may bring bitcoins one step closer to real legitimacy.
It is not clear yet when Ulbricht will be able to present his argument to a judge.