It may be the currency of the future, but it now appears that Bitcoin is not immune to the U.S. government's prying eyes and hands — especially when it's being used to fuel black market activities.


A few days ago, the federal Drug Enforcement Agency announced that it had seized 11.02 bitcons (~USD$814.22) from South Carolina's Eric Daniel Hughes, who was trying to buy illegal substances with the digital currency. It's the first time this has ever happened, setting a very important precedent in this emerging area.

So, while the government doesn't print or regulate Bitcoin, it can still seize it — prompting some experts to ask, how the hell did they do it?


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According to Let's Talk Bitcoin, a DEA agent could have taken control of a computer with an unencrypted wallet and transfer the amount to a DEA controlled wallet. Or the DEA could have set up a "honeypot" trap at the popular Silk Road "anonymous marketplace" — an Internet safe haven prone to black market activities. And in fact, Bitcoin is regularly used to purchase illegal items through this back channel. If that's the case, Hughes would have unknowingly transferred the Bitcoins directly to the DEA. Ouch.

Let's Talk Bitcoin suspects it was the honeypot scenario, as the sender-address was not emptied into the "DEA" account.

All this shouldn't come as a complete surprise. It was naive to think that Bitcoin could somehow escape the system — even if the seizure was orchestrated by a kind of trick.


If you're unfamiliar with Bitcoin, this short video will fill you in.