Silk Road hacker who stole $4B in Bitcoin allegedly outed as US fraudster

A person using a large key to lock a file containing Bitcoin logos

The hacker who stole over $4 billion in Bitcoin from dark web marketplace Silk Road — only to have the Feds seize it — may have finally been unmasked.

The Feds closed Silk Road in 2013 and sentenced founder Ross Ulbricht to life behind bars in 2015. However, 70,411 BTC ($359,000 then, $4.5 billion now) was stolen just 18 months before the site ceased trading.

Authorities have kept details of the theft under wraps ever since. In fact, the incident went entirely unreported until the US disclosed details of it last November.

What we do know is the Bitcoin in question ended up in wallets controlled by a mysterious hacker, who has until now has only been named “Individual X.”

According to The Smoking Gun (TGS), Individual X sent 941 BTC ($4,800 then, $58.6 million now) out of those wallets in the weeks following the Silk Road hack.

The remaining Bitcoin stayed put until April 2013 — when the balances of both were sent to a single address dubbed “1HQ3,” a reference to its first four characters.

Fast forward to November 2020, and the US authorities announced that 69,370 BTC ($4.3 billion) stolen from Silk Road had been forfeited — which TSG noted could be the most lucrative criminal forfeiture in US history once they’re sold.

  • The US knows who stole Bitcoin from Silk Road.
  • Ulbricht threatened the hacker for return of the Bitcoin.
  • Individual X did not return the Bitcoin and held it instead.

The San Francisco US Attorney’s office and Internal Revenue Service identified Individual X in 2020.

The hacker gave up the illicit Bitcoin in exchange for a number of undisclosed concessions from prosecutors, including anonymity protected by the Department of Justice.

Silk Road hacker’s cover may just have been blown

Now, the identity of Individual X — the Silk Road hacker — might’ve just been made public, and all because of a bad business deal from three years ago.

TSG has detailed recent legal filings that document efforts of Las Vegas entrepreneur Jay Bloom (53) in recovering a related $2.2 billion settlement from “serial fabulist” Raymond Ngan (49), reportedly the largest civil settlement in the state’s history.

Ngan filed for bankruptcy shortly after a Nevada judge ruled in Bloom’s favor in 2018, and while relatively little is known about Ngan, what is paints a colourful picture. Some reported claims stand out:

  • Ngan said to be a child refugee from a Cambodian concentration camp.
  • He claimed to have attended the Massachusetts Institute of Technology at age 14.
  • Ngan purported to have raised billions of dollars by managing funds for foreign governments.

Since mid-March, Bloom has been lodging claims to the Silk Road BTC seized by the Feds last November — made as part of efforts to recover the billions from bankrupt Ngan.

This implies Bloom believes that Ngan is the really person behind the Individual X moniker. However, Bloom is yet to publicly disclose evidence.

[Read more: Finland wants to sell $80M in Bitcoin before it’s too late]

In any case, Bloom’s claim rests on the notion that a Nevada court approved the acquisition of all of Ngan’s financial assets in May 2018 — years before the Feds moved to seize to the Bitcoin stolen from Silk Road.

Bloom’s lawyers argued he (via his business entities) holds “judicially-declared superior property interests in those assets,” or as TSG put it, Bloom says he had first dibs.

Whether that’s true is a matter for the courts. Until then, the US will have to refrain from selling off any of the seized Bitcoin, which must only get tougher as the price of BTC climbs.

Bitcoin is up 300% since the forfeiture last November.

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