Silk Road forfeits $28M in Bitcoins seized from its servers

Prosecutors emphasize that the Bitcoins were seized in connection with a probe of the online drug marketplace -- not because they were Bitcoins.

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Federal prosecutors announced Thursday the forfeiture of $28 million in Bitcoins seized from Silk Road, an online marketplace that allowed the anonymous sale of illegal merchandise.

Preet Bharara, the US Attorney for the Southern District of New York, announced the forfeiture of 29,655 Bitcoins seized from Silk Road's server in connection with a civil forfeiture action against the online marketplace, which was seized by the FBI in October. Bharara emphasized that the Bitcoins had been seized in connection with the investigation and not due to the currency's unregulated nature.

"These bitcoins were forfeited not because they are bitcoins, but because they were, as the court found, the proceeds of crimes," Bahara said in a statement.

The forfeiture order was signed Wednesday by US District Judge J. Paul Oetken, according to the statement.

A criminal complaint filed last September in Manhattan charged the alleged owner and operator of the online marketplace, Ross Ulbricht, with computer hacking conspiracy, narcotics trafficking conspiracy, and money laundering. In the days after Ulbricht's indictment, eight people in three different countries were arrested in connection with the sale of drugs on Silk Road.

Silk Road was an online drug marketplace where its nearly 1 million anonymous users could buy and sell all sorts of drugs using the secure Tor browser. The purchases were typically made with the virtual currency Bitcoin and sales are said to have totaled more than $1 billion, earning Ulbricht nearly $80 million, prosecutors said.