What I don't understand is why can't the bitcoins can not be seized and returned. If the feds can seize bitcoins obtained illegally through drugs why can't they seize bitcoins obtained illegally through stealing?
To own a bitcoin is to own the cryptographic private key that holds those bitcoins. If the bitcoins moved to a new address, then you would need the private keys of the new address. They can be acquired, but it's difficult, since hiding a crypto key is a lot easier than hiding cash.
And, to answer the other part of your parent's question (regarding how the Feds can seize bitcoin), it was always my presumption that the Feds merely used their legal authority to compel their targets to turn over their bitcoin (i.e. private keys, etc.).
EDIT: Now that I think of it, it seems like I read somewhere that, with Mt Gox in particular, the Feds seized their ~$5M in BTC a while back by having them transfer it to a wallet under their control. Can anyone corroborate this?
Thanks. I'd never heard of Google. What a fantastic invention!
Sadly, though, it doesn't appear to help as much with vague recollections, and certainly doesn't seem to pass the Turing test where actual discussion is concerned.
In any event, it appears that I've mixed it up with Silk Road, where actual bitcoin was seized.
Turns out that it takes a bit more "Googling" (I think I've coined a new verb for this new Google thing) to determine that you have something wrong vs. corroborating that something is true.
This all gives me a new idea. I haven't quite fleshed it out yet, but I am tentatively calling it a "discussion forum".
