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Department of Justice announces auction of $117M Silk Road Bitcoin stash

The U.S. Department of Justice will auction off the 2,933 Bitcoin seized from Ryan Farace, a convicted dealer from the dark web marketplace Silk Road. Currently, the Bitcoin stash value stands at approximately $117 million.

The disclosure of the stash recovery follows the recent sentencing of 38-year-old Farace and his 72-year-old father, Joseph Farace. The government’s official forfeiture notice, published online, outlines its intention to dispose of the seized digital assets, as directed by the U.S. Attorney General.

As per the notice, interested parties, excluding the defendants, have a 60-day window from January 10, 2024, to file a petition asserting an interest in the assets. Once these petitions are resolved or the specified filing period concludes, the government will attain clear title to the property.

This clearance facilitates the U.S. government in transferring valid title to any prospective purchaser or transferee of the Bitcoin.

The Faraces sentencing saga

The Silk Road case, which has captivated public interest for years, enters a new chapter with the Faraces’ sentencing. In 2018, Farace was found guilty of producing and distributing Xanax pills on various dark web sites, including Silk Road. Operating under the pseudonym “Xanaxman,” Farace reportedly accumulated over 9,138 Bitcoins from these illegal sales, valued at around $364 million.

While serving his prison sentence in 2020, Farace surrendered only 24 Bitcoins, claiming he lost access to the remainder of his cryptocurrency holdings. Yet, evidence emerged showing Farace directed his father to transfer 2,874 Bitcoins to an associate, aiming to relocate the funds outside the U.S.

Some seized Bitcoin was also linked to ex-Secret Service agent Shaun Bridges, who stole Bitcoin during the Silk Road investigation. Bridges agreed to forfeit the stolen crypto, initially $800,000, now valued at over $36 million.

The government intercepted their communications and officials recovered the rest of Farace’s Bitcoin stash, now valued at around $117 million. This admission was later included in both Faraces’ plea agreements.

In the recent development, on January 5, Farace received an extra 54 months in federal prison, while his father Joseph was handed a 19-month sentence, followed by two years of supervised release. Both Faraces pleaded guilty to money laundering conspiracy charges and received sentences of 4 years and 19 months.

With no claims filed, the government can auction the combined stash of almost 3,000 Bitcoin. This sale, involving crypto tied to law enforcement corruption and Silk Road, may impact Bitcoin’s price. A date is yet to be announced, but the auction is scheduled to occur soon.

Government’s ongoing efforts

The upcoming auction of Farace’s $117 million Bitcoin raises concerns about cryptocurrency legitimacy and security. While governments combat illegal crypto activities, it highlights the potential for abuse by figures in power, exemplified by the involvement of high-ranking individuals like Bridges.

Establishing regulatory frameworks is crucial to fostering trust and integrity in digital assets as the crypto market matures. The government is also actively making ongoing efforts to combat cybercrime and reinforces the commitment of law enforcement to address illicit activities within the cryptocurrency space.

In November 2022, the DOJ also revealed another successful seizure of Bitcoin from the Silk Road. Approximately $3.36 billion in Bitcoin was confiscated, making it the second-largest crypto recovery in federal history.

The funds, stolen a decade ago from the now-defunct Silk Road, were part of an operation that led to the shutdown of the Silk Road by the FBI in 2013. James Zhong from Gainesville, Georgia, pleaded guilty to wire fraud, acknowledging his involvement in the theft of the substantial Bitcoin sum.