NYT reports:
Two Israeli computer scientists say they may have uncovered a puzzling financial link between Ross William Ulbricht, the recently arrested operator of the Internet black market known as the Silk Road, and the secretive inventor of bitcoin, the anonymous online currency, used to make Silk Road purchases.
Dorit Ron, a computer scientist at the Weizmann Institute, and Adi Shamir, a pioneering cryptographer who is a member of the applied mathematics faculty at the Institute, will publish a paper Sunday exploring how the 29-year-old Mr. Ulbricht, who was arrested by the Federal Bureau of Investigation in October and has been charged with a murder-for-hire scheme and narcotics-trafficking, acquired and protected the estimated millions he made in commissions operating Silk Road. The researchers say Silk Road, at the time of Mr. Ulbricht’s arrest, had sales of $1.2 billion, generating $80 million in commissions. A huge run-up in the value of bitcoin in the last month has exponentially increased those amounts.
However, the researchers added, they believe the F.B.I. has seized only about 22 percent of the commissions they have identified, and that they themselves have only been able to trace about a third of the total[...]
Mr. Ulbricht was arrested last month, the scientists used public information to begin tracing Silk Road-related transactions. Among their discoveries was a particular transfer to an account controlled by Mr. Ulbricht from another that had been created in January 2009, during the very earliest days of the bitcoin network, which was set up the previous year.
Although the authors state that they cannot prove that that account belongs to the person who created the bitcoin currency, it is widely believed that the first accounts belong to a person who identifies himself as “Satoshi Nakamoto,” but who has remained anonymous and has not been publicly heard from since 2010[...]
In tracing various transactions made to and from Mr. Ulbricht’s account, the authors found an intriguing one involving the transfer of 1,000 bitcoin, which would have been worth $60,000 when it was made on March 20 of this year, but is now worth roughly $847,000.
They write: “Such a single large transfer does not represent the typical behavior of a buyer who opens an account on Silk Road in order to purchase some narcotics (such buyers are expected to make an initial deposit of tens or hundreds of dollars, and to top the account off whenever they buy additional merchandise). It could represent either large-scale activity on Silk Road, or some form of investment or partnership, but this is pure speculation.”
The mysterious account that made the investment had at one point accumulated 77,600 bitcoin, mostly through “mining” operations, an amount which would now be worth approximately $64 million.
“The short path we found suggests (but does not prove) the existence of a surprising link between the two mysterious figures of the bitcoin community, Satoshi Nakamoto and DPR,” the authors write, referring to Mr. Ulbricht as the Dread Pirate Roberts.
In addition to the curious transaction, which they say they cannot explain, the authors said they discovered that much of the bitcoin accumulated by Mr. Ulbricht has remained beyond the F.B.I.’s grasp[...]
the scientists speculated that the reason the F.B.I. had not recovered all Mr. Ulbricht’s bitcoin might be that he was using a second computer that has not been located.
The full article is here.
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