The unusual sequence of occasions that in the end led to Ulbricht’s restitution windfall first got here to gentle in November 2020, when the Justice Division introduced that it had seized nearly 70,000 bitcoins from someone it referred to only as Individual X. That unnamed particular person, in line with an IRS prison investigations affidavit, had stolen the bitcoin fortune from the Silk Street whereas it was nonetheless on-line by exploiting a safety vulnerability within the website. Ulbricht, in line with the affidavit, went as far as to threaten Particular person X personally in an try to influence them to return the cash. However as a substitute, Particular person X held onto the hoard of cash for greater than seven years because the cryptocurrency appreciated massively in worth. An IRS prison investigation was in a position to hint the funds, establish Particular person X, and persuade them to forfeit the stolen drug cash to keep away from prison prosecution.
By the point the almost 70,000 bitcoins had been seized, that they had grown to greater than $1 billion in worth—on the time, the most important ever prison seizure ever carried out by the Justice Division. (That file has since been damaged by the seizure of $3.6 billion from a New York couple accused of laundering the proceeds of the hack of the cryptocurrency trade Bitfinex.)
Within the time since that seizure, nevertheless, court docket data present that the Justice Division has fought off a sequence of seemingly frivolous claims to the bitcoins, which prevented it from instantly promoting off the cash because it does with different seized cryptocurrency. That resulted within the bitcoins appreciating much more, to just about $3 billion at present trade charges. When the cash are finally bought and that sum is added to the US treasury, it’ll simply cowl Ulbricht’s restitution, with billions of {dollars} to spare.
Ulbricht’s mom, Lyn Ulbricht, who has championed her son’s protection and the case for a pardon since his arrest, wrote in a press release to WIRED that the compensation of his restitution represents a big victory. “We’re very happy that the monetary penalty that was wrongly imposed on Ross has been reversed, simply as different false costs towards him had been dropped in federal court docket after trial,” Ulbricht’s mom writes, referring to a separate murder-for-hire cost within the District of Maryland that was dropped after Ulbricht’s life sentence. “That is simply one other reminder that the case towards Ross has at all times been misrepresented and weak, and we sit up for the day when Ross’ unjust sentence is corrected and he returns to the free world the place he can contribute to society.”
She notes, nevertheless, that like every prisoner, her son cannot maintain any monetary belongings in jail past a commissary account for fundamental wants. Latest gross sales of NFTs based mostly on Ulbricht’s paintings, as an illustration, raised more than $6 million, however the funds went right into a belief earmarked for Ulbricht’s protection, she says, in addition to charitable contributions to different prisoners and their households.
The restitution compensation doesn’t suggest a lot for Ulbricht’s hopes of a pardon or a change to his sentence, argues Berkeley’s Weaver. Nevertheless it does cast off a restitution order that Weaver has at all times thought-about a misguided “blood from a stone” try and squeeze Ulbricht for extra bitcoins.
“Any individual concerned within the early days of Silk Street is now not the topic of the fed’s ire, the fed’s bought their restitution, and Ross now not has that stupidity hanging over him,” Weaver concludes. “Looks as if a win-win-win for all concerned.”
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