Authorities are “ignoring” sizable stashes of “forked” cryptocurrencies when they make bitcoin seizures from criminals, according to research from blockchain analytics and RegTech company Coinfirm.
- In a blog post Friday, Coinfirm said it has found "substantial funds" left in wallets by government agencies that may still be accessible by criminals.
- The post cites as an example the recent seizure by the U.S. Justice Department of over $1 billion in bitcoin said to have been hacked from defunct dark market Silk Road.
- An anonymous character, "Individual X," is said to have helped the DoJ obtain access to the wallet and in return walked away with no charges.
- However, Coinfirm said it tracked the funds to other wallets for cryptocurrencies that were forked from bitcoin and found that these funds have not been seized.
- Forking is when a blockchain splits into two different versions, sometimes creating a new cryptocurrency in the process.
- Coinfirm said it had found wallets related to the Silk Road assets for the forked coins bitcoin private, bitcoin diamond and super bitcoin, which together contain a total of $387,000 in those cryptocurrencies.
- "Whoever has access to the private keys of the main wallet, would still have access to these funds," Coinfirm said.
- The company said it has further found "dozens of cases" in which authorities may have left funds accessible to suspects "instead of properly accounting for and seizing those assets."