BitCoins Taken in Federal Drug Bust
In the first case of its kind, a Charleston man had his electronic currency, known as BitCoins, seized by federal authorities in relation to a drug bust in April.
This is the first time ever that the federal government has seized, as an asset, electronic currency.
The US Drug Enforcement Agency recently posted a forfeiture notice indicating that they had seized 11.02 BitCoins – $814 – from 31-year-old Eric Daniel Hughes, for allegedly violating the Controlled Substances Act. Hughes has not yet received any formal drug charges, and the DEA offered no other information about his arrest.
However, savvy internet users believe that the BitCoin seizure means that the DEA has finally managed to infiltrate the infamous Silk Road, a site that is part of the “Deep Web” which remains hidden to most internet users.
The Silk Road website is an online clearing house for drugs of all sorts, and the site only accepts BitCoin currency. Users on the blog Let’s Talk BitCoin! linked the BitCoin account number on the DEA’s documentation to a transaction in April on the Silk Road site for exactly 11.02 BitCoins.
“This is the first time something like this has happened with Bitcoin,” said Adam B. Levine, editor of Let’s Talk Bitcoin!, told the Post and Courier. “And the interesting subtext is: We don’t have any idea just how involved the DEA is with Bitcoins.”
Although the DEA has said that they seized Hughes’ BitCoins, questions immediately arose regarding how the DEA actually has possession of an anonymous digital currency.
BitCoins are a crypto-graphic digital currency that derives its value based on ledgers, which are updated and archived periodically using peer-to-peer sharing technology. Once each ledger is archived, a certain number of new BitCoins will be “minted” and released for use, with a plan that no more BitCoins will be minted by 2140, leaving the numbers static at 21 million BitCoins. Because of their anonymity and separation from centralized institutions such as banks and the federal government, BitCoins have become frequently used in illegal drug and gambling activities online.
BitCoin Seizure Came After Local Drug Bust
Reportedly, Charleston police officers raided Hughes’ apartment last month, before the DEA seized Hughes’ BitCoins. On June 5th, Hughes was arrested and charged with possession of and trafficking in illegal drugs, including marijuana and prescription medications.
Hughes also reportedly sold 10.7 grams of marijuana, and 0.77 grams of muscle relaxant, to informants who worked with local drug bust authorities.
The drug bust on Hughes apartment turned up ten bags of the narcotic Suboxone in his bedroom. Officers also found digital scales, a small amount of marijuana, various white powders and pills, computer equipment, and a loaded pistol.
Charleston police would not comment on the drug bust and computer seizure, referring all questions to the DEA. However, it is likely that Hughes’s computer was seized so that the federal government could seize his BitCoin account.
The Strom Law Firm Helps Defend Against Federal Drug Busts and Seizures
The Strom Law Firm, LLC represents individuals charged with Federal Drug Crimes including:
• Importing controlled substances
• Manufacturing methamphetamine “Meth”, marijuana, or cocaine
• Conspiracy to possess with the intent to distribute
• Possession with Intent to Distribute large quantities of drugs
Federal drug charges are serious and can lead to severe consequences. Many federal drug charges carry severe mandatory sentences with limited opportunities for probation or parole.
Federal drug investigations and indictments are often combined with other charges including:
- 1001 False Statement Violations,
- money laundering,
- conspiracy, and
- asset forfeiture.
Given that most drug cases involve a search and seizure, we will analyze all of the evidence to determine how to present the most effective defense possible through our familiarity with the Federal Judicial Process and South Carolina’s criminal law. If you have been subjected to a federal drug bust that included a search and seizure, you have the right to challenge the seizure in federal court. The attorneys at the Strom Law Firm can help. We offer free, confidential consultations to discuss the facts of your case, so contact us today. 803.252.4800
