The DEA Just Seized 11 Bitcoins

That comes out to $814.22 USD. Hardly staggering. But the Drug Enforcement Administration can nevertheless carve another notch in its bloated belt: In an apparent first for both the DEA and the world's foremost cryptocurrency, the agency has nabbed its first haul of bitcoins from an individual. The question is, did the DEA set up a bogus "honeypot" account to peddle drugs and then flag the substances as seized once payment cleared?

A post on the virutal-currency futures blog Let's Talk Bitcoin suggests as much.

But let's back up. Word of the bust, if it could be called that, comes in a DEA report issued today (.pdf). The Official Notification notes a DEA seizure of 11.02 BTC from one Eric Daniel Hughes of South Carolina in April 2013. Here's the line item, buried on page 125 of 128:

DISTRICT OF SOUTH CAROLINA 13-DEA-581051, 11.02 Bitcoins, Acct.#1ETDwGUC1QcjYuehFr3u1FD3MvDaUs7SFy, VL: $814.22 which was seized in Charleston, SC from Eric Daniel Hughes AKA Casey Jones on April 12, 2013

It's unclear just what "controlled substance" Hughes, better known as Casey Jones, was looking to get his hands on. A cocktail of research chemicals? A mass of copy-cat MDMA? A bunch of synthethic weed? We're not sure--and that maybe doesn't matter too much for now. What is clear is that "seizure" in this sense most likely points to Hughes' money being netted during a sting on the Silk Road, the inimitable and fast-growing online drugs marketplace, not "seized from the bitcoin user's wallet," according to Andreas M. Antonopolous, a security expert who contributes to Let's Talk Bitcoin.

Which brings us to the possibility that the paltry seizure stemmed from a honeypot. As LTB notes, "the Bitcoin address referenced in the complaint recieved a transaction for 11.02btc at 17:10:36 Blockchain time on the date noted as 'seized.'" In other words, this may well mean that either the DEA spoofed a computer with an encrypted bitcoin wallet, then moved the money to a DEA-helmed wallet; or more likely, that the saga of Casey Jones wasn't a flesh-and-blood confiscation at all. "This could be an illicit 'Silk Road' transaction," LTB continues, "where US authorities set up a 'honeypot' selling account, and accepted the 11.02btc as payment."

We may never know for sure. The twist is that Hughes, per language at the top of the DEA's Official Notification, could in theory move to recoup his property (ie. the 11 bitcoins) on grounds of hardship as his forefeiture proceeding waits to see its day.

For now, as everyone's favorite cryptocurrency deals with considerable growing pains, online drug sales will continue booming apace. Sure, the Silk Road may be showing a few cracks here and there. But so long as the DEA's drug war budget--a cool $23 billion for 2012 alone--continues putting lopsided emphasis on "stopping" Mexican ditch weed from slinking through the US-Mexico border, the Silk Road, bitcoin, research chemicals, and some combination will ensure the laughing stock of any future drug-related bitcoin "busts." As Mike Power writes in Drugs 2.0: "There is a sense of unregulated, late-stage capitalist anarchy in the online research chemical scene at this point, in 2013."

Casey Jones isn't maybe just high on (maybe) something like cocaine or speed, and in a position to maybe even reclaim his bitcoin. He is everywhere, now.

Reach Brian at brian@motherboard.tv. @thebanderson

More crypocurrency and drugs:

Traveling Down the Silk Road to Buy Drugs With Bitcoins

The SIlk Road Is Showing Cracks