In November of 2020 an individual identified by the US Department of Justice only as “Individual X” met with an IRS agent named Tigran Gambarian and prosecutors at the US Attorney’s office in San Francisco. This unnamed individual typed the long string of bitcoin private key symbols on Gambarian’s laptop, allowing Gambarian to move 69,370 bitcoins from Individual X’s Bitcoin address to an address controlled by the US government.
In the four years it took the U.S. government to establish legal ownership of this massive sum of bitcoins—identified by the IRS as stolen proceeds from the Silk Road’s dark drug market—its value grew to a staggering $4.4 billion. The cash forfeiture appears to have been part of a deal that kept Individual X out of jail, although the terms of that deal have never been made public.
Instead, in a strange twist of fate, Gambarian, the IRS criminal investigator who tracked down and seized this record amount of cryptocurrency, is sitting in a Nigerian prison while those billions finally end up in the US treasury.
On Wednesday, the US Supreme Court refused to hear an appeal against a lower court ruling that the US government can confiscate nearly 70,000 bitcoins belonging to individual X, which the person allegedly took from the Silk Road more for a decade exploiting a security vulnerability in a market. That stolen drug money has since been claimed by various parties, most recently by a company called Battle Born Investments, which tried to appeal the forfeiture decision and claims it bought Silk Road’s bitcoins through bankruptcy proceedings. Only now, after that appeal failed, four years after the stolen money was traced in an investigation led by Gambarian of the IRS Criminal Investigations, can the US government finally take official possession of the wayward bitcoins likely to be sold at an auction for dollars by the US Marshals Service, as there have been smaller amounts of cryptocurrency seized in the past.
“The Supreme Court’s decision not to hear the case means that this will now be taken away from the United States government,” said Will Frentzen, one of the US attorneys who handled the Individual X case and is now an attorney at the law firm Morrison Foerster . “This is the largest ever crypto seizure that will go to the US Treasury.” In fact, thanks to the wild appreciation of Bitcoin in recent years, this appears to be the largest criminal cash seizure of any kind to be added to the US federal budget. (The seizure following the theft of 120,000 bitcoins from cryptocurrency exchange Bitfinex was even larger, but will likely be paid out to victims and creditors rather than being held by the government.)
During those same years, however, Gambarian took an even more incredible path: in 2021. he left the IRS to take a job as head of investigations at Binance, the world’s largest cryptocurrency exchange – a move widely seen as driven by Binance’s belated deal as an attempt to clean up its own widespread use of money laundering, which caused the company to pay a $4.3 billion criminal fine to the US government last year. When Nigeria followed that fine by accusing Binance of similar criminal behavior and devaluing the country’s national currency, Gambarian was invited to Abuja to negotiate with the Nigerian government earlier this year. Instead, the Nigerian government detained Gambarian, took his passport and has now imprisoned him for more than six months, accusing him of money laundering and tax evasion as a proxy for his employer.
