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."

See also: US Government Darknet Drug Raids Seize $6.5M in Cash and Crypto

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