$800 Million: Bitcoin Whale Starts Moving Funds Associated With Silk Road's Operator

Francisco Memoria
  • 31 Aug 2018
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  • 6854 views
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  • In #Bitcoin
  • A large bitcoin whale has recently moved $800 million worth of BTC and BCH.
  • The funds likely belong to Silk Road's operator DPR, or another high-level employee.
  • Other possibilities include self-proclaimed bitcoin creator Craig Wright, and a Mt Gox whale.

A bitcoin whale has recently moved over 111,000 bitcoin and bitcoin cash to over 80 wallets, each with nearly 1,000 BTC in it, at press time worth about $6.9 million. The funds had previously been scattered to numerous addresses with 100 BTC each.

The move, first spotted by social media users, involves funds that initially came from a well-known bitcoin address in the cryptocurrency ecosystem, 1933phfhK3ZgFQNLGSDXvqCn32k2buXY8a. Blockchain data reveals its first transaction came from a wallet associated with Silk Road’s operator, known as “Dread Pirate Roberts” (DPR).

The address first received funds on July 2, 2011. One of the very first transactions adding funds to it links back to another well-known address, that of alleged Silk Road operator Ross Ulbricht. The address had been leaked on the Bitcointalk forum, in a post where Ulbricht himself, under the nickname “altoid” asked for help using the bitcoin API with PHP.

This could mean the address belongs to Ross Ulbricht himself, but transaction dates don’t add up. Ulbricht was arrested on October 2, 2013 for allegedly running the Dread Pirate Roberts account, administrating the now-defunct Silk Road marketplace on the deep web.

The bitcoin wallet, which we’ll here address as 1933, split its 111,000 BTC fortune on March 9, 2014 – long after the FBI arrested Ulbricht and took down the Silk Road. At the time, 1933 divided the funds into 60,000 coin chunks, then into 30,000 coin chunks, and so on until it got to 100 coins per address.

This type of behavior on the blockchain, mapped by Bitcointalk forum users, could mean its owner used a bitcoin tumbling service – which essentially mixes transactions on the blockchain - to hide its tracks.

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While Ulbricht was already in custody at the time, the transactions are consistent with a theory his lawyer brought forth – that the Dread Pirate Roberts account wasn’t just controlled by one individual.

As Motherboard reported, in December 2016, someone accessed the DPR account while he was in jail, on November 18. The FBI, after taking down the Silk Road, seized some bitcoins but estimated the majority of the BTC the website made wasn’t found. Interestingly, in an interview with Forbes made before the marketplace was taken down, DPR noted the site was a “collaborative effort.”

Dividing a 111,000 BTC Fortune

On March 9, 2014 as mentioned above, 1933 divided its 111,000 BTC fortune. While the date doesn’t say much at first, on that day news outlets revealed the blog of Mt Gox CEO Mark Karpeles had been hacked, and that the hackers managed to leak data from the exchange’s servers, which reveal how much each user had on the platform.

While this may initially seem unrelated, smart bitcoin blockchain explorer Wallet Explorer shows 1933 is also linked to “MtGoxandOthers,” meaning it’s also received funds from addresses associated with the now-defunct cryptocurrency exchange Mt Gox.

Adding the puzzle’s pieces, we presume 1933 used the exchange to trade bitcoins - whether the address belonged to DPR or not – and feared for his or her security once the Mt Gox data was leaked onto the public. Using a bitcoin tumbler would help the individual behind 1933 hide his or her funds securely, either from malicious hackers or from government agents trying to seize the rest of the Silk Road’s bitcoins.

Adding to this, Mt Gox was, at the time, a dominant cryptocurrency exchange. DPR, a high-level Silk Road employee, or a simple bitcoin whale would likely use it to exchange their funds so they could be used elsewhere. At the time, bitcoin wasn’t as widely known or accepted as it now is.

Why move to addresses with 999.99 BTC?

Currently, it’s unclear why 1933 moved the funds from 100 BTC addresses to 1,000 BTC addresses. Ross Ulbricht’s clemency petition is nearing 70,000 signatures, which could mean he or another Silk Road operator are planning on using the funds if he becomes a free man.

None of the over 80 wallets in which 1933 has its funds seem to be sending money to known cryptocurrency exchange addresses. While this implies the funds aren’t being sold anytime soon, merging the funds into addresses with larger amounts shows the individual is either ready to do something with them or is moving to a more secure setup.

His fortune, not counting most bitcoin forks, is of nearly $1 billion. His 111,111 BTC, not counting change, adds up to over $773 million, and the same amount in bitcoin cash adds up to $59.7 million. It’s worth pointing out that despite the bear market, which saw bitcoin’s price drop from a near $20,000 all-time high to about $6,870 at press time, 1933 hasn’t sold his funds or added to its fortune.

Likely Not Craig Wright’s Funds

Some Reddit users have pointed out the address appears on documents regarding the Kleiman Estate vs Craig Wright case. While it does appear, our investigation also found that during said case Craig Wright – who claims to be bitcoin creator Satoshi Nakamoto – claimed to own various large public addresses.

Among them are 1933, and addresses known to have coins from the Mt Gox exchange. Some of the addresses Craig claims to own are, in fact, under the control of the exchange’s trustee Nobuaki Kobayashi

Research for this article was made in collaboration with CryptoNewsReview.