American cops have made their first ever seizure of Bitcoin after raiding the house of an alleged drug dealer.
The Drug Enforcement Administration seized a haul of 11.02 Bitcoins (worth $814.22 at today's rates) from an address in South Carolina on April 12. They were in the possession of a man suspected of dealing drugs using the infamous Silk Road marketplace, accessible only as a hidden Tor service.
The case came to light thanks to eagle-eyed Bitcoin advocates, who searched the police record of seizures.
The man is alleged to have sold pharmaceutical drugs such as Adderall, Dexedrine, Vyvanse, Klonopin, Clonazepam, and suboxone.
"Seizure is probably a word used to imply that money was received in the process of a Silk Road sting operation, rather than actually seized from the Bitcoin user's wallet," said Andreas M. Antonopoulos, a security expert and Bitcoin fan.
This would mean cops would have had to create their own Bitcoin wallet and forcibly transfer the alleged dealer's virtual dosh to themselves. Although El Reg can't confirm that this is what the cops did, if it turns out to be true the police may be a sticky legal situation, as Bitcoin's legality in the US is far from certain.
The main Bitcoin exchange, Mt. Gox, is coming under increasing pressure from US authorities and has had to close for two weeks.
On a Bitcoin forum, one user who knew the man whose virtual currency was seized said it was bad security that led to cops finding out who he was.
He wrote: "The crazy thing is, he messaged me from his vendor account, and willingly gave me his entire personal address, not a drop address. I myself warned [name removed]* at the time to be careful because anyone at anytime could blackmail him, and he pretty much dismissed the idea and said 'no problem, I might start a alternate buyer account to start buying. I'm not worried about it'." ®
Although a name has been published elsewhere in connection with the alleged drug dealer, The Register can't confirm whether the name is actually that of the chap who was cuffed. Thus, our peddling pal must remain anonymous for now.