SilkRoad: How the US Government speculated with Bitcoins and lost $600 million!
It was on 2 October 2013 at exactly 3:15 in San Francisco that the FBI arrested 29-year-old Ross William Ulbricht.
It was the biggest dark market busting operations and the beginning of one of the biggest financial losses to the US State.
In this report we will take you down the memory lane into one of the most historic events in modern day financial fallacy.
The Silkroad story
Silkroad was founded in 2011 by Ross William Ulbricht as a TOR powered dark anonymous market where users could sell just about anything, though it was primarily used for drug sale.
User had to pay to create accounts and it had over 950,000 registered users at the time it was shut down in 2013. Silkroad's users had done over 1.2 million transactions in Bitcoins which were worth $1.2 billion.
Perhaps the most disturbing use of the site was when founder went to the extreme to hire a hitman on the site to murder one of the users who had threatened to blackmail him.
The hitman quoted $150,000 to $300,000 which Dread Pirate Roberts refused as too high, stating that he had a recently gotten the same job done for "$80,000".
Eventually a price was agreed at $150,000 and the hitman late confirmed the job was done, however during his trail prosecutors said they found no evidence that the crime was actually carried out.
A screenshot of the SilkRoad website on TOR
The epic raid
On the fateful day of 2 October 2013, the US government would arrest the founder of Silk Road, which was the first and largest online dark market places at the time.
Would you believe what led to his arrest? It was a simple question he had asked on StackOverFlow about trying to connect to TOR!?
Take a look the silly StackOverFlow question that got this billion dollar cyberpunk and the largest and first online dark market busted.
Following investigations by one Federal Bureau of Investigation's (FBI), the US government was able to pin down the ID of the suspected owner, Ross William Ulbricht and effect an arrest against him.
After closing down the site, over hundreds of thousand of Bitcoins were seized belonging to the site's founder.
The bureaucratic speculation
In what could have been nothing other than bureaucratic heist, the US government sold 144,336 Bitcoins for $48 million, averaging $334 on each Bitcoins.
There would be several "legitimate" reasons why the US government did not want to retain hold of Bitcoins then, however sell it was not the only one way to address the issue.
Today, one Bitcoins is roughly $4,200 at minimum and those 144,336 Bitcoins would be worth $606,211,200 at $4,200 each.
Due to bureaucratic speculation, the US government got $48 million when it could have got over $600 million. That was how the FBI caused financial loss worth $600 million to the US State.
What do you think?
This is the future
I could use some Clonazepam, hope the silk road was still open.
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