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

In November of 2020, an individual recognized by the US Department of Justice solely as “Individual X” sat down with an IRS agent named Tigran Gambaryan and prosecutors on the US Attorney’s workplace in San Francisco. That unnamed particular person typed out the lengthy string of characters of a Bitcoin personal key on Gambaryan’s laptop computer, permitting Gambaryan to maneuver 69,370 bitcoins from Individual X’s bitcoin deal with to 1 managed by the US authorities.

Over the 4 years that it has taken the US authorities to ascertain authorized possession of that huge sum of bitcoins—recognized by the IRS as stolen proceeds of the Silk Road dark-web drug market—its worth has grown to a staggering $4.4 billion {dollars}. The cash’s forfeiture seems to have been a part of a deal that stored Individual X out of jail, although the phrases of that deal have by no means been publicly disclosed.

Instead, in a weird accident, it is Gambaryan, the IRS prison investigator who traced and seized that record-breaking sum of cryptocurrency, who’s sitting in a Nigerian jail as these billions end up in US coffers.

On Wednesday, the US Supreme Court declined to listen to an enchantment to a decrease court docket ruling that the US authorities can seize Individual X’s practically 70,000 bitcoins, which the particular person allegedly took from the Silk Road greater than a decade in the past by exploiting a safety vulnerability available in the market. That stolen drug cash has since been claimed by varied events, most lately by an organization known as Battle Born Investments that sought to enchantment the seizure ruling and claimed to have bought the Silk Road bitcoins by way of a chapter continuing. Only now that this enchantment has fizzled, 4 years after the stolen cash was tracked down in an investigation led by Gambaryan at IRS Criminal Investigations, can the US authorities lastly take official possession of the wayward bitcoins, which can doubtless be auctioned off for {dollars} by the US Marshals Service, as smaller sums of seized cryptocurrency have prior to now.

“The Supreme Court’s decision not to hear the case means that this is now is going to be forfeited to the United States government,” says Will Frentzen, one of many US prosecutors who dealt with the Individual X case and is now an legal professional on the authorized agency Morrison Foerster. “This is the largest ever forfeiture of crypto that will go to the US Treasury.” In truth, due to Bitcoin’s wild appreciation lately, it seems to be the most important ever prison seizure of cash of any type to be added to the US federal funds. (A seizure following the theft of 120,000 bitcoins from the cryptocurrency change Bitfinex was even bigger however will doubtless be repaid to victims and collectors quite than stored by the federal government.)

Over those self same years, nonetheless, Gambaryan has taken an much more unlikely path: In 2021, he left the IRS to take a job as the pinnacle of investigations at Binance, the world’s largest cryptocurrency change—a transfer seen broadly as pushed by Binance’s belated try to scrub up its personal widespread use for cash laundering, which led the corporate to pay a $4.3 billion prison advantageous to the US authorities final 12 months. When Nigeria adopted that advantageous by accusing Binance of comparable prison misconduct and devaluing the nation’s nationwide forex, it was Gambaryan who was invited to Abuja to barter with the Nigerian authorities earlier this 12 months. Instead, the Nigerian authorities detained Gambaryan, took his passport, and has now jailed him for over six months, charging him with cash laundering and tax evasion as a proxy for his employer.