Silk Road

According to blockchain research firm CipherTrace, 69,370 Bitcoins, worth about one billion dollars at the time of this report, has been transferred from a wallet associated with the Silk Road dark web marketplace to another wallet.

69,370 Bitcoin was moved from the Silk Road bitcoin address on November 3, 2020. This is the first activity on the address since April 2015. The bitcoins were sent through the following transactions:

  • 0d13a52e3b640d05cdf31b41f335b327f126cb79d9eec1e2bc46556ef30a0b57
  • 3f036ff88bb851b57a1e28780dbce35a6457a8b57995c095b55b3b0cf48ba9fd
Silk road
Silk road

The bitcoins were moved from the bitcoin address 1HQ3Go3ggs8pFnXuHVHRytPCq5fGG8Hbhx to the address bc1qa5wkgaew2dkv56kfvj49j0av5nml45x9ek9hz6 in two separate transactions. The first transaction was for 1 Bitcoin and the second transaction was for 69,369 Bitcoin. The first transaction was for a test and the second transaction was the main transaction.

According to CipherTrace:

BTC address 1HQ3Go3ggs8pFnXuHVHRytPCq5fGG8Hbhx transferred its entire balance to address bc1qa5wkgaew2dkv56kfvj49j0av5nml45x9ek9hz6 via 2 separate transactions. 1 BTC was sent in the first transaction while the remaining 69,369+ BTC was sent shortly after. The initial transaction was most likely sent as a test transaction to ensure that the BTC wasn’t accidentally sent to a wrong address. This action is typically seen when moving large amounts of cryptocurrencies to new addresses.

It appears that this transaction was most likely conducted to switch between address formats. The former address is a Legacy/P2PKH address while the new address is a Bech32/P2WPKH address. Legacy addresses—the original Bitcoin address format—start with a �?1’ while Bech32 addresses—the native segwit address format—start with bc1q. Bech32 addresses are more efficient with block space, which allow BTC blocks to hold more transactions. Additionally, Bech32 addresses are composed of numbers and only lower-case letters so there is less room for error than prior address formats. Around 5% of BTC is currently held in Bech32 addresses.

Since 1HQ3Go3ggs8pFnXuHVHRytPCq5fGG8Hbhx held BTC prior to the Bitcoin Cash and Bitcoin SV hard forks (among others), the address owner would also have access to the coins associated with the hard forks. Evidently, around the same time all of the BCH at this address was moved to qqrkjml7h3ymnc7ydd9m5r9s9hnqectmluwpxezd9a via TX 8e0d6a7f4a2fb523972febdb47845585aa94dbf3252b4432e9fad8d0b5037ac1. Additionally, all of the BSV was moved to 1F884r9J2WKbu8wekebqqRcu1Bw1jiRXba via TX 5ff9c81c00bca688cc5c8713f3e38fd1f2a0a85a86de96f4afd096fdc1583fbc. Both of the addresses that the BCH and BSV were sent to had no transactions prior to today.

While it is most probable that these transactions were made to stay up to date with the Bitcoin network, there is also some speculation that the wallet could have been cracked by hackers. These movements could possibly mean that the wallet owner is moving funds to new addresses to prevent hackers from accessing the wallet.dat file or that hackers have already cracked the file.

CipherTrace is monitoring the addresses for additional movement.

Who is controlling the Silk Road bitcoins?

There could be many reasons why this happenned according to CipherTrace, hacking is a possibility.

As seen in the past, former Secret Service agent Shaun Bridges and former Drug Enforcement Administration agent Carl Force, Silk Road funds could also be in the hands of corrupt federal agents.

UPDATE: U.S. justice department announces that it seized the Silk Road bitcoins.

According to nbcnews:

The U.S. Justice Department announced Thursday it had seized over $1 billion worth of bitcoin associated with the underground online marketplace Silk Road.

The Justice Department said it was seeking the forfeiture of the cryptocurrency, which had been in the possession of an unnamed hacker who stole them from the “notorious” website. It is the largest cryptocurrency seizure ever made by the U.S. government, the department added.

The government will now try to prove in court the items are subject to forfeiture. In the past, the government has later auctioned off forfeited cryptocurrency.

Silk Road was seized by the government in 2013, with officials describing the underground website as a massive illegal drug and money laundering marketplace.

The website’s accused creator, Ross Ulbricht, was convicted in 2015 of seven counts of enabling illegal drug sales via bitcoin. He was sentenced to life in prison, and lost an attempted appeal in 2017.