The Department of Justice has announced another potential auction of seized bitcoin, totalling over 8 million USD. There’s a noticeable uptick in bitcoin-related prosecutions since at least 2014 and the Ross Ulbricht, Silk Road affair. With the price of bitcoin rising to stratospheric heights, the phenomenon has made bitcoiners relatively wealthy; it might have also brought law enforcement scrutiny, as loose asset forfeiture regulations create potentially perverse incentives for police.
Asset Forfeiture Auction of Bitcoin is New Territory for U.S. Attorney
Utah’s United States Attorney wants to put seized bitcoin back on the market, and fast. Its office has come upon the world’s most popular cryptocurrency by way of a sleepy Utah town opioid drug bust back in late 2016. At the point of seizure, the digital asset’s worth was ‘only’ half a million dollars. With the time it takes to prosecute a case, and the kind of 2017 crypto has had, the coins are now worth 8.5 million dollars. Press insistence upon bitcoin’s frothy bubble being on the verge of economic apocalypse only hastens the the regional Department of Justice’s sense of urgency.
“For federal prosecutors in Utah, sales of seized assets like cars are routine, but bitcoin is new territory, spokeswoman Melodie Rydalch said,” the Associated Press recounts.
Billed as a historic bust for the state at the time, bureaus such as the Drug Enforcement Agency (DEA) were immediately on the scene. Adam Shamo, 26, was taken into custody, and something approaching a pill manufacturing ring was discovered. In a local press account, curiously, the following line appears tucked deep in the story: “The Internal Revenue Service was also on scene, though reasons for their presence were not immediately clear.”
Deductive minds might be able to hazard a guess. The US tax man being at an opioid pill bust in Cottonwood Heights, Utah, isn’t referenced again in either that, nor any other, press account.
Presumption of Innocence, Guilt by Bitcoin Association
Importantly, Mr. Shamo has offered a plea of not guilty. His attorney won’t contest the government’s bitcoin auction (a similar move made by Ross Ulbricht’s counsel, though after prosecution, as such attempts are often futile and expensive).
For its part, mainstream media have not made an easy time for Mr. Shamo’s defense and presumed legal innocence. Headlines of eye-popping numbers are splayed all over the internet, as are various mugshots. He is looking at a 20-year potential prison term and a 1 million dollar fine. His request for bail was denied; “I find Mr. Shamo presents a danger to the community,” the presiding judge said. Prosecutors are also floating the idea of no fewer than 28 overdose-related deaths might be attributed to his and a cohort’s doings, according to a report.
Although “officers seized nearly $1.3 million in cash at Shamo’s house, and that there may be ‘a lot more’ in a hard-to-trace internet currency known as bitcoin,” Assistant U.S. Attorney Stewart Young said, scant attention has been given by popular media to government-printed money’s role in the drug crime ring.
Profit from a bitcoin auction will take place after official resolution of Mr. Shamo’s criminal case. Such lucre is usually distributed to lead agencies, which in this matter might be the DEA. Half a dozen defendants involved in the case, including Mr. Shamo, have already agreed to have related assets sold, including a pickup truck and BMW sedan.
The practice is so ubiquitous, no less than the United States Marshals has a dedicated website to asset forfeiture auctions (worth a look if only out of macabre curiosity). Indeed, governments around the world are also picking up on the theme, including this summer’s auction in South Korea and, the summer prior, in Australia.
It shouldn’t be controversial to assume such prosecutions and resultant profitable government auctions will rise in direct relationship to bitcoin’s price.
What do you think about government bitcoin auctions? Let us know in the comments section below.
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Author: C. Edward Kelso