U.S. Authorities Deepen Investigation on Bitcoin Exchanges for Possible Silk Road Link


U.S. Authorities Deepen Investigation on Bitcoin Exchanges for Possible Silk Road LinkU.S. officials have expanded their investigation into bitcoin exchanges and other bitcoin-related businesses as it tries to find any links between the companies and the online illegal drug marketplace Silk Road.

The investigation, which is in its early stages, aims to find how bitcoin became associated with the closed drug bazaar, potentially ruining the virtual currency’s claim of legitimacy. Various bitcoin exchanges were issued with subpoenas by Manhattan federal prosecutors during the winter. Collapsed Japanese bitcoin exchange Mt. Gox received subpoenas that requested for customer-transaction data and materials used to attract investor business.

The Federal Bureau of Investigation agents and the prosecutors are investigating whether Mt. Gox may have processed transactions for Silk Road, individuals who are privy to the investigations told Wall Street Journal.


Mt. Gox collapsed in February after it claimed hackers stole 850,000 worth of customer bitcoins valued at least $470 million. This represented 7 percent of the world’s bitcoins in circulation. Mt. Gox rushed to file for Chapter 15 bankruptcy protection in a Texas court in March in order to prevent US customers from seizing the cash it had stored in U.S. banks.

Silk Road only accepted bitcoin payments, enabling users to buy every illegal item from forged drivers license, passports and narcotics. Its founder, Ross Ulbricht, was charged with multiple counts of conspiracy and various other charges and the site closed down last year. Ulbricht’s, who has denied the charges, will present himself this November when his trial begins in a Manhattan federal court.

Another entrepreneur, Charles Shrem, was charged in January for money laundering after his firm BitInstant was found to have assisted customers to carry out transactions on Silk Road using bitcoins. His trial is set to begin this September. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.

To contact the reporter of this story; Deepak Tiwari at deepak@forexminute.com