Silk Road 'pirate' Ross Ulbricht accuses US government of stealing his $38million Bitcoin booty

THE internet "pirate" accused of running the notorious illegal-drug-peddling website Silk Road claims that the feds are the real buccaneers.

Ross William Ulbricht

THE internet "pirate" accused of running the notorious illegal-drug-peddling website Silk Road claims that the feds are the real buccaneers — robbing him to the tune of $US33.6 million ($38 million) worth of the encrypted, virtual currency Bitcoin.

Ross Ulbricht — who was arrested in October for allegedly masterminding the mysterious "deep web" site — recently filed legal papers in Manhattan federal court admitting he "has an interest as owner" of the more than 173,000 Bitcoins the government seized through forfeiture from Silk Road.

Valued at $US33.6 million, these Bitcoins are assets the government claims were used to facilitate money laundering in support of a host of crimes, including six failed murder-for-hire plots and the sale of cocaine, heroin and other illicit drugs over the internet.

Ulbricht — who allegedly used the workplace alias "Dread Pirate Roberts", a reference to a character in the 1987 cult film The Princess Bride — said in a notarised December 11 statement that he believes the virtual currency should be returned to him because Bitcoins are "not subject to seizure" by federal law.

Ulbricht, 29, now admits the Bitcoin fortune is his — even though he’s previously denied any wrongdoing regarding Silk Road and claimed through his lawyer that the feds arrested the wrong guy.

Ulbricht’s attempt at forcing the government to return the Bitcoins marks the first time the courts have been asked to determine whether the controversial virtual currency is an asset that falls under forfeiture laws, legal experts told The Post.

Daniel Wenner, a white-collar lawyer and former Brooklyn assistant US attorney, called Ulbricht’s argument "very creative and cutting edge," but said he’d be "stunned" if a judge sided with the alleged Silk Road operator.

"I think one would be hard-pressed to convince a court that something you can use to purchase goods, like Bitcoins, isn’t property," he said.

Attorney Jeffrey Alberts, who used to specialise in asset-forfeiture actions as a federal prosecutor for Manhattan US Attorney Preet Bharara, agreed. He said Ulbricht should have "a difficult time" proving his argument because typically "anything of value" can be seized in money-laundering cases.

"Artwork, horses and even intellectual property, such as domain names, have qualified, so there’s no reason to think Bitcoins wouldn’t," he said.

Both Bharara, whose office is handling the Silk Road case, and Ulbricht’s lawyer, Joshua Dratel, declined comment.

Bharara’s asset seizure from Silk Road was the largest-ever by the feds that involved Bitcoins.

Read more at The New York Post.