Bitcoin
Bitcoin logo Ramón Espelt Photography—Getty Images/Flickr RF

Bitcoins Are Easier To Track Than You Think

Jan 30, 2015

Bitcoin is sometimes thought of as the prime anonymous cash of the Internet, believed to be as untraceable as an under-the-table payment to a babysitter or a drug dealer. But the dramatic trial of Ross Ulbricht, a 30-year-old man accused of running the contraband Silk Road marketplace, is finally putting those misconceptions to rest.

Federal agents said they were able to trace 3,760 bitcoin transactions over the course of a year to servers seized in the Silk Road investigation, Wired reports. A former FBI agent named Ilhwan Yum testified in court that he followed more than 700,000 bitcoins from the Silk Road marketplace to Ulbricht's personal wallets.

How did Yum do it?

When federal agents arrested Ulbricht in San Francisco in Oct. 2013, they also seized his laptop before he could encrypt it. That machine gave Yum access to Ulbricht's bitcoin address, which he then compared against what's called the blockchain, a master list of bitcoin transactions kept to prevent counterfeiting. Comparing the two let Yum track bitcoin transfers from Silk Road servers near Philadelphia and Reykjavik, Iceland to Ulbricht's bitcoin wallet.

In Ulbricht's case, the transactions show Ulbricht was trading bitcoins during the same period that his defense attorney said he wasn't involved with the website. But more generally, it shows that bitcoin isn't always as anonymous as it's made out to be.

[Wired]

TIME may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.