In November of 2020, an individual recognized by the US Division of Justice solely as “Particular person X” sat down with an IRS agent named Tigran Gambaryan and prosecutors on the US Lawyer’s workplace in San Francisco. That unnamed particular person typed out the lengthy string of characters of a Bitcoin non-public key on Gambaryan’s laptop computer, permitting Gambaryan to maneuver 69,370 bitcoins from Particular person X’s bitcoin handle to at least one managed by the US authorities.
Over the 4 years that it is taken the US authorities to determine authorized possession of that huge sum of bitcoins—identified 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 Particular person X out of jail, although the phrases of that deal have by no means been publicly disclosed.
As an alternative, in a weird accident, it is Gambaryan, the IRS felony 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 docket declined to listen to an attraction to a decrease courtroom ruling that the US authorities can seize Particular person X’s practically 70,000 bitcoins, which she or he allegedly took from the Silk Highway greater than a decade in the past by exploiting a safety vulnerability out there. That stolen drug cash has since been claimed by varied events for years, most not too long ago by an organization known as Battle Born Investments that sought to attraction the seizure ruling and claimed to have bought the Silk Highway bitcoins via a chapter continuing. Solely now that this attraction has fizzled, 4 years after the stolen cash was tracked down in an investigation led by Gambaryan at IRS Legal Investigations, can the US authorities lastly take official possession of the wayward bitcoins, which can probably be auctioned off for {dollars} by the US Marshals Service, as smaller sums of seized cryptocurrency have up to now.
“The Supreme Court docket’s resolution to not hear the case implies that that is now’s going to be forfeited to america authorities,” says Will Frentzen, one of many US prosecutors who dealt with the Particular person X case and is now an legal professional at authorized agency Morrison Foerster. “That is the biggest ever forfeiture of crypto that can go to the US Treasury.” Actually, because of Bitcoin’s wild appreciation lately, it seems to be the biggest ever felony seizure of cash of any variety to be added to the US federal finances. (A seizure following the theft of 120,000 bitcoins from the cryptocurrency alternate Bitfinex was even larger, however will probably be repaid to victims and collectors moderately than stored by the federal government.)
Over those self same years, nevertheless, Gambaryan has taken an much more unlikely path: In 2021, he left the IRS to take a job as the top of investigations at Binance, the world’s largest cryptocurrency alternate—a transfer seen broadly as pushed by Binance’s belated try to wash up its personal widespread use for cash laundering, which led the corporate to pay a $4.3 billion criminal fine to the US government final 12 months. When Nigeria adopted that high quality by accusing Binance of comparable felony 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. As an alternative, 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.
