The US Drug Enforcement Administration has posted an official notice stating that it seized bitcoins from an individual for purchasing a controlled substance. According to Let's Talk Bitcoin, this may, in fact, be the first time a law enforcement agency has seized bitcoins.
The DEA notice shows that, among many other people, a Mr. Eric Daniel Hughes (AKA Casey Jones) had 11.02BTC, with a value of $814.22 USD, on April 12th, earlier this year. The digital money was taken in forfeiture as the individual was in violation of the Controlled Substances Act (21 U.S.C. §§ 801 et seq.), in the district of South Carolina.
The notice is a general release, detailing all of the forfeitures by US citizens in violation of the Controlled Substances Act, of which Mr Hughes is one of many. As such, there are no details in the notice as to how the bitcoins were actually seized.
However, Let's Talk Bitcoin say:
There is no indication the Bitcoin protocol was compromised. ‘“Seizure” is probably a word used to imply that money was received in the process of a Silk Road sting operation, rather than actually seized from the bitcoin user’s wallet. ” said Andreas M. Antonopoulos, a security expert and Let’s Talk Bitcoin contributor.
The bitcoin address referenced in the notice, 1ETDwGUC1QcjYuehFr3u1FD3MvDaUs7SFy, can be seen on the blockchain receiving 11.02 BTC on April 12th 2013, which matches the DEA notice.
The blockchain also shows the same bitcoin address that paid the 11.02 BTC had remaining funds of 33.580606 BTC that were transferred into a change address. Mr Hughes then went onto spend another 1.7 BTC on the same day.
The receiving address, cited in the DEA notice, transferred the 11.02 BTC out five days later, and on the 22nd of May received a further 17.24 BTC, which was then sent onto another address which was subsequently combined into a 200 BTC block, effectively anonymizing further transactions.