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 personal 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—recognized by the IRS as stolen proceeds of the Silk Street darkish internet 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 saved Particular person X out of jail, although the phrases of that deal have by no means been publicly disclosed.
As a substitute, in a weird coincidence, it is Gambaryan, the IRS legal 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 Street greater than a decade in the past by exploiting a safety vulnerability available in the market. That stolen drug cash has since been claimed by numerous events for years, most lately by an organization referred to as Battle Born Investments that sought to attraction the seizure ruling and claimed to have bought the Silk Street bitcoins by means of 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 possible be auctioned off for {dollars} by the US Marshals Service, as smaller sums of seized cryptocurrency have prior to now.
“The Supreme Court docket’s choice to not hear the case signifies 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 most important ever forfeiture of crypto that can go to the US Treasury.” In reality, because of Bitcoin’s wild appreciation lately, it seems to be the most important ever legal seizure of cash of any variety to be added to the US federal funds. (A seizure following the theft of 120,000 bitcoins from the cryptocurrency trade Bitfinex was even bigger, however will possible be repaid to victims and collectors relatively than saved by the federal government.)
Over those self same years, nonetheless, Gambaryan has taken an much more unlikely path: In 2021, he left the IRS to take a job as the pinnacle of investigations at Binance, the world’s largest cryptocurrency trade—a transfer seen broadly as pushed by Binance’s belated try to scrub up its personal widespread use for cash laundering, which led the corporate to pay a $4.3 billion legal high quality to the US authorities final 12 months. When Nigeria adopted that high quality by accusing Binance of comparable legal 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 a substitute, 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.
