The FBI Seizes The Silk Road, Bitcoin Rates Fall

Silk Road, a website that was used to buy and sell drugs, murder contracts, and other illegal services, has been seized by the FBI and alleged admin Ross Ulbricht has been arrested. The FBI also found $3.6 million in Bitcoins in Ulbricht’s possession, the BBC reports.

The FBI Seizes The Silk Road, Bitcoin Rates Fall

Silk Road was one of the most prominent websites

The Silk Road was one of the most prominent websites on the Tor hidden network, notorious even among Tor users that didn’t actually visit it. Tor is used by all kinds of people who want to keep their communications secure, including political dissidents, criminals, and law enforcement agencies, but the Silk Road seemed to mostly be a haven for people looking for something illegal, or at least disreputable. After all, if you wanted to buy something innocuous. You would have an easier time going through normal websites.

Qualivian Investment Partners Up 30% YTD; Long ORLY Thesis

Qualivian Investment PartnersQualivian Investment Partners commentary for the second quarter ended July 30, 2020. Q2 2020 hedge fund letters, conferences and more “Short-term investors will accept a 20% gain because they didn’t spend the time to develop the conviction and foresight to see the next 500%.” - Ian Cassell Executive Summary Readers of investment letters fall into Read More

To keep people anonymous, Silk Road and other hidden services use a crypto-currency called Bitcoins that are untraceable as long as users take appropriate precautions. As always, with encryption and security, the devil’s in the details.

The FBI says that they were first tipped off that Ulbricht might be the person they were looking for when he asked for help on an Internet forum, using his real name, about implementing specific security features which closely matched those used by the Silk Road. He later changed his forum username from his real name to Frosty, a name associated with the Silk Road, which was even more suspicious. While probably not enough to convict, that was enough for the FBI to charge and arrest him. No doubt the seized computers have enough incriminating evidence to make the rest of the case.

Bitcoins fell after the arrest was announced

Bitcoins fell after the arrest was announced, which can be seen as a blow against legitimate users. The security experts who designed Bitcoin and have argued for its relevance are mostly libertarians, people who don’t like the idea of their choices being tracked and recorded, but the prospect of an untraceable currency was also very attractive to criminals. Fair or not, falling Bitcoin exchange rates immediately after the Silk Road is shuttered can only hurt the currency’s public image.

Bitcoins initially fell from about $140 to $110, though they have risen back to $126 and may reach their previous value once the shock of the news has passed.