Before Ross Ulbricht’s conviction on charges related to his operation of the darknet market Silk Road, he held 144,000 bitcoins worth $28.5 million. Today, their value would exceed $10 billion.

Ulbricht earned this trove by charging a 10% fee from Silk Road transactions. When the FBI shut down Silk Road for various illegalities, federal agents seized — and stole — any bitcoin they could find.

Also, in a series of bizarre twists, a hacker swiped some of the bitcoin before it could be seized, and North Korean hackers swooped in to take a share.

This mess led the federal government to negotiate an agreement that some misappropriated bitcoin would be used to pay the $183 million in restitution that Ulbricht was required to pay to the US government.

As an illegal enterprise involved in sales of narcotics and firearms, most of the bitcoin on Silk Road went into US court proceedings and has slowly been auctioned off by US Marshalls. Some of it remains in the custody of the US government, pending court proceedings.

The two federal agents who stole bitcoin from Ulbricht’s stash face charges themselves, including wire fraud and money laundering. 

The federal government ultimately auctioned off Ulbricht’s bitcoin. Venture capitalist Tim Draper, who won nine of the auctions and a stash of 30,000 bitcoins, has since added his voice to the movement to grant clemency to Ulbricht.

Read more: Supreme Court won’t stop sale of 69,370 Silk Road bitcoins

That movement has gained momentum and has culminated in a solemn, repeated promise from incoming President Donald Trump that he will free Ross Ulbricht from federal prison by January 21, 2025.

Double life sentence could soon be ending

Ulbricht is serving a double life sentence for operating Silk Road. Supporters have called the sentence excessive, especially considering that he is a non-violent offender and prosecutors dropped charges related to allegations that he had hired a hitman.

Since then, Ulbricht has communicated with the outside world through his mother’s X (formerly Twitter) account. Because he has no internet access in prison, he sends paper notes to Lyn Ulbricht, who then posts his words to X.

In the years since his imprisonment, Ulbricht’s mother has led the push for his clemency. Specifically, Lyn wants a US president to commute, not pardon, Ross. This would not undo his conviction yet would allow him to leave prison.

She created a Change.org petition that has received over 600,000 signatures. Signers of the petition claim he is unlikely to become a repeat offender if released.

Tracing the blockchain for Ross Ulbricht’s bitcoin

Lyn has sold Ross’ physical art through a non-profit organization, Art4giving, raising $765,000 on Ulbricht’s behalf for causes such as prevention and treatment of drug addiction and supporting recently released convicts’ efforts to reintegrate into society.

On the blockchain, an NFT featuring Ulbricht’s hand-drawn art from prison has also fetched seven figures at auction. A supporter purchased one of his NFTs, for example, on December 9, 2021, for $4.1 million in ETH via NFT marketplace SuperRare.

Read more: Attorney who kept Ross Ulbricht in prison to lead DoJ crypto task force

However, this considerable donation is not in Ulbricht’s personal possession. Instead, as his website states, “All proceeds raised from the Ross Ulbricht Genesis Collection NFT auction will not be owned by Ross Ulbricht or his family, but by a legally separate entity that will redistribute proceeds towards the Art4Giving fund and efforts to free Ross Ulbricht.”

FreeRoss.org, Lyn Ulbricht’s website that she operates on behalf of Ross, accepts crypto donations as well. Its listed bitcoin wallet contains 0.14959432 BTC worth $11,500. Donors have also given him 1.5 BCH ($550), 881 DOGE ($150), and 0.19 ETH ($550).

There are several other crypto wallets with smaller amounts of funds, as well, such as Monero and Horizen.

As an important note, most of these wallets hold far less than their lifetime receipts. For example, Ulbricht’s bitcoin wallet has received a total of 12.45 BTC ($950,000) since inception. It is unclear whether these funds remain in his ownership after being swept or if they have already been expended on his clemency or philanthropic efforts over the years.

The blockchain only tells part of the story

Whether Ross or Lyn owns other crypto assets beyond the wallets listed on FreeRoss.org is unclear. Neither he nor his family is required to disclose donations publicly. Although he certainly has millions of supporters around the world — including some of the earliest and most wealthy Bitcoiners — his current assets are unknown.

In any case, Donald Trump promised to pardon Ross Ulbricht at the outset of his second presidential term, and, assuming Trump makes good on that pledge, Ulbricht will also emerge with at least a few thousand dollars — and possibly much more.

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The founder of MyTrade, a cryptocurrency firm that was caught wash trading by the FBI, pleaded guilty on Wednesday to manipulating crypto markets for his client firms.

Liu Zhou was arrested in the wake of the FBI’s “Operation Token Mirrors,” a sting that used an FBI-created token called NexFundAI to out various companies engaging in wash trading. The FBI discovered 60 cryptocurrencies involved in the scheme and seized $25 million worth of crypto assets.

Zhou and MyTrade offered a service called Volume Support that used bots to repeatedly buy and sell any desired token, artificially inflating their volume.

However, the scheme came crashing down when FBI agents posing as NexFundAI advisors approached the company with a view to becoming one of its clients. At this point, the 39-year-old revealed that his firm “does self-trades — a buy and a sell in the same second,” and executes “pump and dumps.” 

Read more: DWF Labs partner allegedly caught trying to drug job applicant

Zhou also revealed MyTrade’s goal of finding “other buyers from the community, people you don’t know about or don’t care about,” saying “we have to make [the other buyers] lose money in order to make profit.” 

A guilty plea was submitted in a federal court in Boston. Zhou admitted to conspiracy to commit market manipulation and wire fraud. He is scheduled for sentencing on February 27, 2025.

As part of his plea, he must cease operations of Volume Support and include this disclaimer on his site, “Volume support is a form of wash trading and illegal under the laws of the United States.”

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Phoenix Wallet, a non-custodial Bitcoin lightning wallet, has announced that it’s being removed from US-based app stores and encouraged users to make sure to empty their wallets. 

This decision seems to have been made by ACINQ, the company behind Phoenix Wallet, which stated in a tweet that “recent announcements from US authorities cast a doubt on whether self-custodial wallet providers, Lightning service providers, or even Lightning nodes could be considered Money Services Businesses and be regulated as such.” 

Read more: What to do if you’ve used Samourai Wallet

Recently, the founders of Bitcoin mixing wallet Samourai were indicted in the Southern District of New York under allegations that they facilitated illegal transactions, including laundered funds. 

This was followed by the Federal Bureau of Investigation issuing a warning in which it informed users that it had begun ‘operations’ on a variety of unregistered crypto firms that it believed were money services businesses and told users that they may experience ‘financial disruptions.’ 

These latest crackdowns follow a long history of US authorities pursuing wallets and mixers. This has included sanctioning addresses used for Tornado Cash, convicting the operator of the Bitcoin Fog mixer, and many others.

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The Federal Bureau of Investigation (FBI) in the United States has issued an alert warning Americans that it has “recently conducted law enforcement operations against cryptocurrency services which were not licensed in accordance with federal law” and that users “may encounter financial disruptions during law enforcement actions.” 

These financial disruptions could include “losing access to funds after law enforcement operations target those businesses.”

Specifically, the alert warns against using any money services businesses (MSB) that are not appropriately registered, and further highlights the risk of those “that do not collect know your customer (KYC) information from customers.”

It’s not clear which recent law enforcement operations the alert is referring to but it comes on the heels of the recent indictment of the founders of the Samourai Wallet Bitcoin mixing service in the Southern District of New York.

Read more: What to do if you’ve used Samourai Wallet

Binance, the largest cryptocurrency exchange, recently also agreed to a deferred prosecution agreement related to financial crimes, including failure to appropriately enforce KYC requirements.

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The Federal Bureau of Investigation (FBI) and Securities and Exchange Commission (SEC) appear to be investigating popular Twitter spaces host and entrepreneur Mario Nawfal, following complaints of embezzlement and other wrongdoings filed by those who worked for him.

Former US Air Force analyst Chet Long acted as an advisor for Nawfal. He alleges Nawfal embezzled funds from a company he once led as CEO, in a complaint filed with the US consulate in Calgary, the FBI, and the SEC back in December. He also alleges the 29-year-old entrepreneur “openly discussed tax evasion” with him.

Long says that Nawfal, who apparently owes him $27,000, is officially under the FBI’s radar. Agents called Long and told him to keep a cell phone as evidence.

Nawfal says he doesn’t owe Long anything. He claims he maintained an “amicable” relationship with Long despite the analyst’s claims that Nawfal caused his family emotional distress.

• Nawfal gained online attention as a prominent user of BitClout, a failed cryptocurrency social trading site.
• He refers to himself as a ‘serial entrepreneur’ and has launched several companies, including startup incubator International Blockchain Consulting Group — but many of these ventures have failed.
• Reporting by Protos exposed Nawfal’s shady cryptocurrency practices earlier this month, including a dodgy initial dex offering (IDO) that appears to have scammed family and friends.

Read more: Lawsuit embroiled Machi Big Brother has lost over $10M in NFTs

SEC receives Nawfal complaints from other former business associates

Nawfal also allegedly owes $60,000 to International Blockchain Consulting Group’s former chief marketing officer, Frank Heijdenrijk. He claims that Nawfal embezzled as well as inflated his Twitter audience with bots. Heijdenrijk says he reported Nawfal to the Dutch police, SEC, German stock exchange, and Germany’s financial regulator.

One of Nawfal’s former contractors, Sigmund Holtz, says the SEC approached him and asked questions about Nawfal’s business practices — indicating that investigations are very much ongoing.

However, Nawfal denies all of these complaints. In a text message to NBC, Nawfal said that he has an “impeccable record” and that investigators have never gotten in touch.

“I have never been contacted by any law enforcement agencies, as there is no legitimate grounds for investigation. Thus, any assertions indicating the involvement of law enforcement appear to be blatantly false,” he told reporters via WhatsApp.

The SEC and FBI have not commented, likely following a policy of not discussing ongoing cases. They may not feel obligated to inform Nawfal of any pending investigation.

Elon Musk endorsed Nawfal because of course he did

Elon Musk has occasionally interacted with Nawfal’s tweets, including retweeting his Twitter Space about the Wagner Group’s aborted revolt against Putin. He praised Nawfal’s ‘coverage’ of the event.

Musk has pledged to eliminate bots from Twitter, which makes his support of Nawfal odd. Evidence found by online sleuths suggests that Nawfal conspired with Winn Solutions to prop his account up with bots. Winn Solutions produced at least 570 bot accounts that can attend Nawfal’s Twitter Spaces, clap, send emojis, follow speakers, and retweet the Spaces.

Read more: FBI warns of fake jobs abroad that enslave victims for crypto scams

Heijdenrijk seemed to concur with these allegations and complaints, claiming many of Nawfal’s Twitter engagements are paid for — with an average of 469 “seeded accounts” (bots) per post. He says Nawfal started using the fake engagement in September 2022.

Nawfal looks on track to join the ranks of crypto stars who caught the ire of regulators. Whistleblowers have filed complaints with the FBI and SEC, accusing him of serious accusations.

It remains to be seen if Nawfal actually misappropriated funds from a company he used to lead — but based on reports by the whistleblowers, the FBI and SEC are actively investigating what appears to be a growing mountain of evidence.

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In a public service announcement published on Monday, the US Federal Bureau of Investigation (FBI) warned citizens of fake job ads that lure people to Southeast Asia, where they’re held against their will and forced to commit international crypto scams on unsuspecting victims.

The fake jobs could be anything from tech support, call centre customer service, and beauty salon technicians, the FBI stated. In order to lure victims, lucrative benefits, salaries, and accommodation are offered.

But once they land in the country wherein they believe they’ll be working, victims have their passports confiscated and they’re threatened with violence unless they commit crypto scams online. What’s more, they’re told they must pay off mounting debt — travel fees, room and board, and on occasion, their debt gets worse when they’re sold to other criminal groups.

These types of scams often target Asia-based victims, the FBI noted. Indeed, reports of crypto scam rings using enslaved individuals regularly surface. In November, Protos reported that thousands were enslaved in Cambodia by Chinese crime rings to run fake crypto ICOs and scams. 

Read more: Crypto scam refused to return £10,000 to cancer patient

“The bosses said if I tried to leave they would just sell me to another gang,” Soraton, a 20-year-old from Thailand, told the LA Times. “That’s when I realized I was a slave.”

“Instead of getting fired for poor performance, you get physical punishments — forced push-ups and squats, tased, beaten, deprived of food, locked up in dark rooms or worse,” said Jacob Sims, director for International Justice Mission Cambodia, which has helped to rescue over 100 workers from scam gangs.

“On the other hand, those who consistently meet or surpass their targets are rewarded with more freedoms, food, money and control over other victims.”

It’s unclear how many cases of these scams are employed on US citizens. However, the FBI included in its announcement several precautionary measures Americans can take to limit the risks of falling prey to fake jobs, including researching the company before accepting an offer, informing family members before you depart, and scheduling regular check-ins during your time there.

Victims of these scams are encouraged to report them via www.ic3.gov.

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The US Federal Bureau of Investigation (FBI) says it has the private keys to nearly $190 million worth of Bitcoin, which had been bought with cash allegedly embezzled from Sony’s life insurance subsidiary.

According to prosecutors, Sony Life employee Rei Ishii falsified transaction instructions to fraudulently authorize transfer of around ¥17 billion ($149 million) in company funds.

Ishii allegedly directed the funds to a La Jolla, California bank account in May 2021 before exchanging them for Bitcoin.

On Monday, the Department of Justice (DoJ) filed a civil forfeiture to return the Bitcoin to Tokyo-headquartered Sony Life, or at least the funds used to buy it.

“It is our intent to return the stolen money to the victim of this audacious theft, and today’s action helps us do that,” said Acting US Attorney, Randy Grossman.

“Criminals should take note you cannot rely on cryptocurrency to hide your ill-gotten gains from law enforcement. The United States coordinates extensively with its international partners to forestall crime and retrieve stolen funds,” Grossman added.

FBI ‘obtains’ a lot of Bitcoin private keys

According to a statement issued by Sony Life, Ishii was arrested by Tokyo Metropolitan Police on November 29. This was the result of a joint collab by Japanese and US investigators.

FBI special agent in charge Suzanne Turner said both Sony and Citibank cooperated with law enforcement to track the missing millions.

• The investigation began following Sony’s discovery of the missing funds in August.
• The FBI seized 3,879.16 BTC ($188.9 million) on December 1.
• Thanks to a Bitcoin price rally, the funds are now worth over $190 million — 25% more than in May.

“The FBI’s technical expertise was able to trace the money to the subject’s crypto wallet and seize those funds,” she added.

Predictably, the FBI continues to keep its apparent ability to obtain Bitcoin private keys a secret.

In this case, it could’ve worked with Ishii’s chosen crypto exchange to retrieve the funds, or seized computer hardware that contained their Bitcoin private keys.

Read more: [Bitcoin’s Lightning Network is now under surveillance by US government spooks]

In May (the same month that Sony’s funds went missing), the FBI recovered a Bitcoin ransom paid to Russia-linked DarkSide.

DarkSide hijacked the systems of major gas seller Colonial Pipeline, which cut off almost half of the US East Coast’s gas supply.

In that case, the FBI also “obtained” a private key to recover just over 63 BTC ($3.1 million). This represented around half of the ransom paid to DarkSide.

The agency refused to give up its tradecraft when asked by journalists how they learned of DarkSide’s private key (or its 12-word crypto password).

This led to erroneous reports that suggested the FBI had “cracked” Bitcoin.

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The post FBI seizes Bitcoin from Sony Life employee who stole $150M to buy crypto appeared first on Protos.