HOT: DEA Claims to Have Seized a Users Bitcoins

But, but, but....this wasn't supposed to be able to happen.

The Drug Enforcement Administration posted an Official Notification that Bitcoin (i.e. property) belonging to Eric Daniel Hughes was seized for forfeiture pursuant to 21 U.S.C. § 881, because the property was used or acquired as a result of a violation of the Controlled Substances Act (21 U.S.C. §§ 801 et seq.)

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

Let's talk bitcoin discusses:

The DEA appears to have been the first agency to seize actual Bitcoins from an individual with this seizure.  Exactly how the Bitcoin was seized is not known as of this writing.  However, reading the top of the notice it appears that Mr. Hughes can request release of the seized property during the pendency of the forfeiture proceeding due to hardship.  How the DEA would return the Bitcoin to Mr. Hughes is also unknown.  

There is no indication the Bitcoin protocol was compromised. ‘“Seizure” is probably a word used to imply that money was received in the process of a Silk Road sting operation, rather than actually seized from the bitcoin user’s wallet. ” said Andreas M. Antonopoulos, a security expert and Let’s Talk Bitcoin contributor

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”.  This could mean that either the DEA took control of a computer with an unencrypted wallet and transferred the amount to a DEA controlled wallet, or more likely that this was not an in-person confiscation at all.   This could be an illicit “Silk Road” transaction, where US authorities set up a “honeypot” selling account, and accepted the 11.02btc as payment.