The United States Secret Service (USSS) has seized more than 25 bitcoins from a Coinbase account and seemingly converted them automatically to $13,000 USD, it has emerged.
Also read: Coinbase Integrates PayPal to Broaden its Reach
US Secret Service Seizes Funds
In an official notification dated today, USSS announced that on June 3 it had taken control of “$13,138.12 in U.S. Currency in Lieu of 25.0001538 Bitcoins from Coinbase Inc. Account in the Name of Richard P. Underwood.”
No further details were given regarding the circumstances or motives for the assets appropriation. The account holder now has until September 5 to lay claim to his one-time property.
Unusually, the original balance appeared to have been converted into fiat, marking an interesting practice on the part of law enforcement. It is unclear, however, whether this was done in conjunction with Coinbase through its exchange, or separately, and how the funds are now being stored.
Interesting: U.S. Currency seized in Lieu of Actual Bitcoin from Coinbase Account. (Not Related to Kickass Torrents) https://t.co/R5BR1jopfq
— Brian Cohen (@inthepixels) July 22, 2016
The move marks a classic grievance, both for Coinbase users and its critics, who say that regulatory compliance obligations have tipped the balance of power away from anonymity. Bitcoin balances kept in a Coinbase wallet seemingly are no more anonymous than an equivalent bank account in USD.
Indeed, the service’s attempts to ensure it stays on the straight and narrow have on occasion been intrusive in a way reminiscent of bank monitoring practices.
Reddit user Coinuser1111 sparked a debate on this issue after receiving requests from Coinbase to “describe the primary use case,” for “the source of the bitcoin being deposited” and “the source of funds for … purchases of bitcoin,” as well as to “elaborate on the nature of … outgoing transfers and what service(s) they are related to.”
Community members were keen to point out the difference between using Bitcoin per se and using third parties such as Coinbase.
This month’s arrest of torrent site KickAss Torrents owner Artem Vaulin adds an alarmingly recent relevance to users’ concerns. The Ukrainian Vaulin was arrested in Poland using, among other things, IP address evidence supplied from Facebook and Apple – and wallet address information supplied by Coinbase.
A US court filing stated the following about Coinbase’s involvement:
“Records received from the bitcoin exchange company Coinbase revealed that the KAT Bitcoin Donation Address sent bitcoins it received to a user’s account maintained at Coinbase. This account was identified as belonging to Artem Vaulin located in Kharkov, Ukraine, with a backup email address of email@example.com. The telephone number listed on the Coinbase account was the Vaulin Phone Number, i.e., the number listed for KAT Websites 2, 3 and 4. The KAT Bitcoin Donation Address shows at least one transaction being moved from its account on or about August 20, 2014, to a Coinbase account in Vaulin’s name. A total of $72,767 worth of Bitcoin (valued at the time of transaction) was deposited into Vaulin’s Coinbase account.”
What do you think about the pros and cons of regulatory compliance obligations for Bitcoin third parties? How would you envisage an alternative arrangement? Let us know in the comments section below!
Images courtesy of nbcconnecticut.com, vesti-ukr.com