How did the FBI "seize 260000 BTC"?

The FBI gained access to the private keys corresponding to the addresses that were used by Silk Road to hold user balances. In this manner the FBI was able to transmit the funds to a FBI controlled wallet and thusly confiscate the assets.

Clarification on how the keys might have been accessed (speculation):

The software running on the Silk Road server must have had spending access to the Silk Road users' internal balances. Therefore, there must have been a mechanism to unlock the wallet (assuming an encrypted wallet was used). Thus, the pass-phrase would have been available to the program, concluding from the outcome, likely in the files on the server. As the server was probably running when it was seized, they might have been able to access the files directly and thus gain access.

Murch

Posted 2013-10-22T07:57:44.130

Reputation: 41 609

1Basically the question was asking how could they gain access to the private keys? – Pacerier – 2013-10-22T09:38:35.493

1Can you clarify - why should the Silk Road server have access to the users addresses? and which users - the merchants or the buyers? I thought that Silk Road is an ebay "clone", and I know for a fact that ebay doesn't have access to any of its merchants or buyers paypal accounts, its just a mediator... – ihadanny – 2013-10-22T17:43:21.217

1@ihadanny Silk Road is more like an ebay+PayPal clone. PayPal has access to its users funds when they are in transit or waiting to be transferred or withdrawn. – David Schwartz – 2013-10-22T20:29:07.810

1@ihadanny don't forget: Bitcoin users can have any number of addresses. The Silk Road server may have owned an address for each buyer, or even for each transaction. In this setup, the buyer transfers BTC to "his" SR account, where it's held until the transaction is complete. Then the funds are transferred to the seller and to the SR profits account. This avoids having the server know any private keys belonging to its users, but offers transparency to the buyer that the funds are still being held in escrow. – Crispy – 2013-10-22T22:47:22.173

Cool. I found an ebay+paypal counter for this "escrow" method, which is described here: https://www.paypal.com/uk/webapps/mpp/holds-reserves

– ihadanny – 2013-11-04T17:44:27.130

– Murch – 2013-10-22T08:45:07.560

I recently read something that the FBI can not spend them because they can't decrypt the wallet – RentFree – 2013-10-22T14:12:12.903

@RentFree: That must have been the private funds of Silk Road's owner. – Murch – 2013-10-23T00:28:32.360

@murch correct, that is because Ulbricht will not hand over his private key – rickyduck – 2013-11-04T13:37:06.233

How did the FBI "seize 260000 BTC"?

Answers