A record US$28 million of bitcoins has been formally transferred to the US government several months after it was seized from the server of the black market website Silk Road after the government claimed the digital currency was used to facilitate money laundering.
The action came a day after a Manhattan judge approved the forfeiture of the bitcoins and the website, and three months after San Francisco entrepreneur Ross Ulbricht was arrested on charges he operated an online marketplace for illegal drugs, following a crackdown on the website.
He has pleaded not guilty to charges of narcotics trafficking, computer hacking and money laundering.
US Attorney Preet Bharara said it was the largest ever forfeiture of bitcoins to the government. He called Silk Road "a global cyber business designed to broker criminal transactions".
The website is believed to have collected more than US$1 billion in revenue from more than 100,000 customers.
"These bitcoins were forfeited not because they are bitcoins, but because they were, as the court found, the proceeds of crimes," Bharara said.
The prosecutor said investigators also seized more than US$130 million worth of bitcoins from computer hardware belonging to Ulbricht, though US District Judge J. Paul Oetken had not yet ruled whether those bitcoins must be forfeited.
Ulbricht, 29, has challenged the government's claims to that currency and its insistence that he operated online as Dread Pirate Roberts.
Oetken said on Wednesday he was ordering the forfeiture of the US$28 million of bitcoins and the website because no one had challenged the government's claims to those assets.
Ulbricht is in jail after a Manhattan magistrate judge cited "powerful evidence" he sought the killings of people he believed would interfere with his business. He was charged separately in federal court in Baltimore in an attempted murder-for-hire scheme.
His lawyer did not respond to a request to comment.