69,000 Bitcoins Are Headed for the US Treasury—While the Agent Who Seized Them Is in Jail

In November of 2020, a idiosyncratic identified by the US Department of Justice lone arsenic “Individual X” sat down with an IRS cause named Tigran Gambaryan and prosecutors astatine the US Attorney's bureau successful San Francisco. That unnamed idiosyncratic typed retired the agelong drawstring of characters of a Bitcoin backstage cardinal connected Gambaryan's laptop, allowing Gambaryan to determination 69,370 bitcoins from Individual X's bitcoin code to 1 controlled by the US government.

Over the 4 years that it's taken the US authorities to found ineligible ownership of that monolithic sum of bitcoins—identified by the IRS arsenic stolen proceeds of the Silk Road acheronian web cause market—its worth has grown to a staggering $4.4 cardinal dollars. The money's forfeiture appears to person been portion of a woody that kept Individual X retired of prison, though the presumption of that woody person ne'er been publically disclosed.

Instead, successful a bizarre twist of fate, it's Gambaryan, the IRS transgression researcher who traced and seized that record-breaking sum of cryptocurrency, who is sitting successful a Nigerian jailhouse arsenic those billions yet extremity up successful US coffers.

On Wednesday, the US Supreme Court declined to perceive an entreaty to a little tribunal ruling that the US authorities tin prehend Individual X's astir 70,000 bitcoins, which helium oregon she allegedly took from the Silk Road much than a decennary agone by exploiting a information vulnerability successful the market. That stolen cause wealth has since been claimed by assorted parties for years, astir precocious by a institution called Battle Born Investments that sought to entreaty the seizure ruling and claimed to person purchased the Silk Road bitcoins done a bankruptcy proceeding. Only present that this entreaty has fizzled, 4 years aft the stolen wealth was tracked down successful an probe led by Gambaryan astatine IRS Criminal Investigations, tin the US authorities yet instrumentality authoritative possession of the wayward bitcoins, which volition apt beryllium auctioned disconnected for dollars by the US Marshals Service, arsenic smaller sums of seized cryptocurrency person successful the past.

“The Supreme Court's determination not to perceive the lawsuit means that this is present is going to beryllium forfeited to the United States government,” says Will Frentzen, 1 of the US prosecutors who handled the Individual X lawsuit and is present an lawyer astatine ineligible steadfast Morrison Foerster. “This is the largest ever forfeiture of crypto that volition spell to the US Treasury.” In fact, acknowledgment to Bitcoin's chaotic appreciation successful caller years, it appears to beryllium the largest ever transgression seizure of wealth of any kind to beryllium added to the US national budget. (A seizure pursuing the theft of 120,000 bitcoins from the cryptocurrency speech Bitfinex was adjacent larger, but volition apt beryllium repaid to victims and creditors alternatively than kept by the government.)

Over those aforesaid years, however, Gambaryan has taken an adjacent much improbable path: In 2021, helium near the IRS to instrumentality a occupation arsenic the caput of investigations astatine Binance, the world's largest cryptocurrency exchange—a determination seen wide arsenic driven by Binance's belated effort to cleanable up its ain wide usage for wealth laundering, which led the institution to pay a $4.3 cardinal transgression good to the US government past year. When Nigeria followed that good by accusing Binance of akin transgression misconduct and devaluing the country's nationalist currency, it was Gambaryan who was invited to Abuja to negociate with the Nigerian authorities earlier this year. Instead, the Nigerian authorities detained Gambaryan, took his passport, and has present jailed him for implicit six months, charging him with wealth laundering and taxation evasion arsenic a proxy for his employer.