Bitcoin, A Tool For Prosecuting Crimes

Bitcoin is an online digital currency that has for long been used by libertarians, computer scientists and even criminals as was the case in Silkroad. Just 3 yrs. ago, it seemed like anyone could use this cryptocurrency to make purchases without being tracked down by law enforcers. At that time people thought the digital currency was totally anonymous and FBI didn’t have a chance of finding out who was transacting it.

Bitcoin, A Tool For Prosecuting Crimes

However, Federal Bureau of Investigation agents and other law enforcement bodies had a rather different opinion. They found ingenious ways of seizing Bitcoin and even making arrests where possible. Ross Ulbricht, a 31-yr.-old Texan responsible for creating Silkroad was captured by cops. His Silkroad marketplace was estimated to have facilitated sale of narcotics worth $1 billion. The Silkroad creator was given a life sentence in 2015. Others criminals from various places around the world were also incarcerated for similar charges.

Though most people who use Bitcoin currency are law-abiding citizens motivated solely by privacy concerns, the anonymity it provides can also be a powerful tool for facilitating crime as was witnessed in Silkroad. Academic researchers helped create the data encryption and software systems which make Bitcoin possible, they are now helping authorities nab criminals such as those behind Silkroad.

Sarah Meiklejohn, a computer scientist at University College London, says that these experts operate in a new field incorporating aspects of economics, forensics and computer science. There aren’t many of such experts and they all know each other. She mentions when Bitcoin first emerged, law enforcers were “panicking,” with most officers thinking the technology was dangerous and making it difficult for them to perform their task.

But as arrests and convictions were slowly being made, with one example being the Silkroad case, there emerged a steady shift towards viewing cryptocurrency more as a tool for nabbing cybercrimes. FBI Assistant General Counsel, Brett Nigh, earlier said in an interview that even though Bitcoin operated in a new strange world, investigators could still follow the money without much ado.

This was evident in how the Silkroad investigations were carried out and Bitcoins seized. Investigators had collected every piece of data from Silkroad – from images and text describing Silkroad products to Bitcoin transactions on the blockchain.

Unlike standard money issued by Federal Reserve banks, cryptocurrency like Bitcoin doesn’t have any physical form or gold backing hence making it rather untraceable. This is why Silkroad managed to survive for many years before it was finally shut down. Created back in 2008 by a mysterious man named Satoshi Nakamoto, it has been labeled an “intellectual artifact” and modern frontier of economics.

Bitcoins are amounts associated with certain addresses, unique strings of letters and numbers. For instance, “1Ez69SnzzmePmZX3WpEzMKTrcBF2gpNQ55” represents almost 30,000 BTC seized from the Silkroad site. They were estimated to be worth nearly $20 million at the time. The U.S government auctioned off these Silkroad Bitcoins after seizing it.

Those Bitcoins have since been split up and changed hands several times, but there’s a consistent recording showing their every movement. Both past and present ownership is documented in a “blockchain,” this being a popular public ledger available across the internet.

The task of keeping this cryptocurrency running smoothly and preventing cheating is left to a volunteer workforce, known as Bitcoin miners. They crunch the numbers required to verify the transactions, and also apply a math calculation formula known as “proof of work” to ensure individual miners are honest.

The calculations needed to pass a Bitcoin transaction are so thorough that only specialized computers are used. However, all this effort doesn’t go unrewarded as the act of authenticating a 10-minute transaction chain earns the volunteer miner 25 new Bitcoins. This is how the cryptocurrency Bitcoin is minted.

cryptocurrency Bitcoin

Just like any other currency, the digital currency Bitcoin’s real-world value comes as people who use it to trade for products and services as was the case when Silkroad was still in operation. If you’re not already a miner, the only other way of acquiring Bitcoins is from somebody who owns them. Several companies have come up that sell Bitcoin at a fee, and also provide ATM machines where users can convert them into cash.

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Bitcoin Exchanges Linked To Silk Road? So the FBI Thinks

Silkroad LogoThe FBI are investigating possible ties between bitcoin exchanges and an online drug market Silk Road, an illegal online market which was closed down by the FBI one year ago. In addition to searching for customer transaction logs from every exchange, both the FBI and prosecutors are investigating whether this exchange as well as others companies may have been involved in the transactions. The investigations have just kicked off and no conclusion has been made as to whether or not these companies were involved in these transactions.

As part of the investigation, the FBI seized a huge cache of Bitcoins, a currency that was used in Silkroad transactions. Authorities say they have managed to seize 144,000 bitcoins, worth $28.5 million at the present exchange rate, making it the largest seizure of that crypto currency to have been seized. The cache is believed to belong to Ross Ulbricht, a founder of the Silk Road. While the FBI did not disclose how they concluded the bitcoins belong to Ross Ulbricht, they were certain they were his.

Silk Road was a notorious online marketplace which allowed drug barons to sell and purchase drugs using bitcoins. Before it was shut down by the authorities, over $1.2 billion worth of trade was conducted on the website exclusively in a virtual currency Bitcoin.

Bitcoin Curency

When the FBI ordered its closure on 2 October 2013, the man allegedly behind it, Ross Ulbricht was arrested and charged for running an illegal business. Authorities claimed they violated money laundering act by allowing their users to purchase drugs and other illegal goods on their website, an offense which carries a sentence of 20 years in jail. Ross was using his laptop in San Francisco at a time of his arrest and authorities were expected to use the laptop for proof he is really the kingpin of Silk Road.

>> Click here to find the Silk Road URL and know how to get to the Silk Road 2.0 <<

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Mt. Gox – $400 Million Bitcoin Theft Scandal

Something mysterious just recently happened to one of the most prominent names in the world of Bitcoin; Mt. Gox apparently vanished in thin air like a phantom. A document was leaked regarding the matter, claiming the disappearance of 744,000 customer Bitcoins along with it. Today’s Bitcoin community continues to reel and is still trying to find out what exactly happened. The accusations, rants, and conspiracy theories have only just begun. One thing is for sure, though, this serves as a wake up call for anybody who thought that Bitcoin will have an easy road to general acceptance.

Mt Gox Logo
Tokyo-based Mt. Gox started as Magic: The Gathering card exchange site. As the ardor over Bitcoin had started spreading around the middle part of 2010, the site eventually rebranded to be Bitcoin trade, one of the forerunners of the service. Mt. Gox served as a get-in-the-middle fro those who wanted to magically transform their Bitcoins into much more liquid currencies such as yen or dollars. Also, it had its very own custom wallet software which enabled users to easily manage their Bitcoins over the cloud. Based on the leaked document, this was where things began crumbling off.

The cracks began emerging the early part of this month right when Mt. Gox decided to suspend withdrawals with the claim of serious flaws regarding how Bitcoin protocol confirms transactions. Mt. Gox mentioned that it was very much possible to essentially have a Bitcoin re-spent simply by renaming the whole transaction just before it becamed synced toward the block chain (which means after it received verification.) The Bitcoin Foundation speedily contradicted Mt. Gox to point out that Bitcoin was never really at fault. The thing they so-call “transaction malleability” issues was known. However, it didn’t get enough attention to be considered as a noteworthy problem. The Bitcoin Foundation then scapegoated Mt. Gox’s utterly-customized wallet software for having compounded the bug. Ultimately, this might have been the only thread that led to the unraveling of Mt. Gox when pulled.

Mt Gox Got Robbed

Due to the faulty tracking of the software, Mt. Gox did not really hold the Bitcoins it thought to have. The stolen ones were steadily siphoned off straight from the hot wallet of Mt. Gox — the coins put to use in order to proceed with transactions. Many believe that most of Mt. Gox’s funds were in cold storage when they were all safe from the whole transaction malleability perforation. The leaked documentation claims that cold storage got wiped out, too, which simply means Mt. Gox was automatically transferring coins into the wallet as required.

The ascertainment of the leaked information’s validity will remain at hold until someone directly from Mt. Gox provides udpates, which actually makes the current situation sound worse all the more. Mt. Gox’s wallet software drawbacks prove to be severe with the 744,408 Bitcoins stolen through the course of numerous years. For now, Mt. Gox has decided to suspend operations causing the site users to cultivate a skeptical outlook, doubting that they will ever retrieve their precious Bitcoins. Virtual currencies indeed hold a vast range of appallingly negative contingencies.

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The Arrest Of Bitcoins Vice Chairman.

BitInstant’s chief executive officer, together with Robert Faiella, has been arrested and has been charged with plotting to commit the felony of money laundering. According to federal prosecutor, Shrem purchased drugs personally on Silk Road while fully aware of the web-site’s drug trafficking activities. According to the department of Justice, the two were charged with selling a million dollars worth of Bitcoins to individuals who attempted to buy as well as sell drugs on a black market website.

Earlier this month, prosecutors announced that they had forfeited $28m worth of bitcoins that had been impounded from Silk Road. Silk Road is a secret marketplace which has the reputation of being used to buy and sell drugs among other things.

Shrem heads BitInstant, which is bankrolled by the Winkloves twins. Last year, the two pumped in more than $1.5 million in this company. Following the arrest of Shrem and Faiella, a spot check revealed that the BitInstant website remained offline on Monday morning.
Shrem also serves as the Bitcoin Foundation’s vice chairman. Only last weekend, he was featured as a key speaker at the Bitcoin conference that was held in Miami.

According to one news release that came from the justice department, Shrem was seized in New York at the John F. Kennedy International Airport, and later charged with the crime of money laundering.
U.S Drug Enforcement Administration’s James J. Hunt, said the following in the news release:

“The charges announced today depict law enforcement’s commitment to identifying those who promote the sale of illegal drugs throughout the world.”

He further added that the two, while hiding behind their computers, knowingly contributed to, and facilitated, anonymous drug sales as a result of which they earned significant profits.

In October last year, the Federal Bureau of Investigations, FBI, closed Silk Road and captured Bitcoins worth millions of dollars. Silk Road, the famous online black market, helps people to buy and sell unlawful goods such as guns and drugs.
Since being busted, the FBI has been using the records belonging to Silk Road to track down other people who are also involved in the illegal activities. It is that information that probably led the law enforcers to catch Faiella and Shrem.

Charges preferred on the duo

Faiella, 52, a native of Cape Coral, and Shrem, aged 24 and a native of New York, were both charged with one count, and that is conspiring to commit the crime of money laundering. Also, they were charged with another count of operating a money transmitting business that was unlicensed. The maximum jail term carried by these charges is 25 years. Shrem faces an extra 5 years in jail, after failing to report a suspicious activity.

The justice department says that Faiella secretly operated a bitcoin exchange on the online black market, Silk Road. After he received Bitcoin orders, he would go ahead and fill these orders through BitInstant. After that, he would sell them at a profit to Silk Road.
Being the CEO as well as BitInstant’s chief compliance officer, shrem was allegedly aware of the reasons for Faiella’s exchanges. Additionally, the government alleges that Shrem personally bought drugs from Silk Road.

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Bitcoin – The Currency used in the Anonymous Marketplace.

bitcoin logo

In the next post I will be showing everyone the final precautions everyone should take when using The Silk Road and also the exact steps to take when figuring out how to get to the anonymous market but first I need to tell you about Bitcoins as this is the currency used in the underground online marketplace. Most people are very surprised to learn that there is no national currency of any kind accepted on The Silk Road including USD, PayPal, credit card, money order, western union and even fewer people actually know what Bitcoins are and how it all works. I am going to break it down for you a little.

Bitcoins are a decentralized digital currency created in 2009. They can be exchanged through computer or smartphones between parties (via the use of email) without the use of a third party financial institution. There are a few places on the net where Bitcoins are an accepted currency and not just the anonymous marketplace. So once you buy some Bitcoins then you trade them with the supplier of the goods you want and then the goods will be posted to you.

So you need to get some Bitcoins right? This is the tricky part.

First you need a Bitcoin wallet, you can do this a number of ways including  going to Bitcoin.org or Blockchain and download a Bitcoin Wallet. This is a piece of software needed to trade Bitcoins with people by allowing you to own the addresses that you will use to trade Bitcoins.

Then you need to buy Bitcoins. You can try to find a direct seller online at such places Bitcoin OTC, Currency Exchange forum section or the Bitcoinery. I would not really recommend this as it is essentially like trading money on Craigslist but without actually seeing the money, a very high chance of getting scammed.

The safest way is to buy Bitcoins through Exchanges.  I personally like bitcoin.de. Follow my instructions in the main top post to find out how to buy bitcoins. After purchasing the Bitcoins you then send them to your Bitcoin wallet. When creating addresses and such ALWAYS remember NOT to use your name or anything that would lead to your true identity. The idea is to be as anonymous as possible.

This is one of my MOST IMPORTANT PIECES OF ADVICE:

When performing any transactions using Bitcoins check the feedback of other users and ALWAYS try to use an escrow service like Btcrow or something like that. You can find them here https://btcrow.com. By using them they will act as a holding center for the funds while the transaction is taking place and they will handle all disputes to make sure no one gets ripped off. One of the best things about using a service like this is that it is a massive deterrent for those people looking to scam you as soon as you mention that you want to use it then they will pull out of the deal if they are looking to scam you.

bitcoin currency

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