Silk Road shut-down: $3.6 million in bitcoins seized in FBI raid

A momentous win for the fight against online money laundering with the shut-down of Silk Road, a black market drug

A momentous win for the fight against online money laundering with the shut-down of Silk Road, a black market drug and weapon purchase platform – the effect on bitcoin remains to be seen.    

As reported by Times US, FBI agents have arrested Silk Road owner and San Francisco resident, Ross William Ulbricht (or “Dread Pirate Roberts” as he is known on the net). The kingpin of the underworld market-place for drugs, guns and other unlawful merchandise was taken into custody on charges of narcotics trafficking conspiracy, computer hacking conspiracy and money laundering conspiracy, not to mention Ulbricht’s alleged “murder-for-hire” arrangement after being threatened with the identity release of website users.

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The criminal website has been running for the past two years on “the dark web”, hidden from mainstream internet users, accessible only through an anonymous browser called Tor, often used to cloak illegal activities, much like those performed through transactions on Silk Road.

But beyond the shear sensation of the story, is where our interest, at payment magnates, is spiked. And that is in the news that the site processed a total of 9.5 million bitcoins, which is valued at around $1.2 billion in sales. This is not surprising, given that one of the greatest concerns around the unregulated and anonymous digital current is the ability to use it for evil in the shadowy markets of underground online activity.

But, even though the value of the currency has taken an immediate and expected knock, following these events, there is a positive perspective to take on the matter. Could it be that by taking down Silk Road, the opportunities for bitcoin to become a mainstream currency are increased?

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New York News and Features says: “Now Silk Road’s closure (and the fact that the FBI has likely deterred other potential Bitcoin drug kingpins from starting up replacement sites) means that the people fighting to legitimize Bitcoin can credibly claim that the old days of the crypto-currency as a tool for vice are over.”

It is quite possible that the reported arrest may deter future criminal activity and create a cleaner path for ongoing investment and growing trust in bitcoins, a topic that we have explored extensively on Payment Magnates, with particular reference to our Jeffrey Tucker interview, in which the bitcoin expert discusses exciting benefits and advantages that bitcoin offers investors, consumers and merchants.

The payment industry is also becoming increasingly involved by offering online merchants payment processing for bitcoin. Jeffrey Tucker encourages merchant acceptable of the digital currency and several PSPs (payment processing companies) are able to integrate the capability into merchants’ existing systems.

In a recent interview with Bitpay’s VP of Sales, Paige Freeman, she explores the challenges and opportunities for e-merchants in the acceptance of bitcoins – covering topics such as cost, security and usability.

Image courtesy of Flickr

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