Federal authorities were able to arrest Eric Daniel Hughes, 31, for drug violations with possible connections to the black market Silk Road on the Deep Web.
It is believed to be the first arrest of its kind, in which the Drug Enforcement Administration (DEA) managed to seize 11.02 Bitcoins worth $814 from the suspect.
Bitcoins do not provide guarantees of anonymity, but their design makes it possible for transactions to be very difficult to trace like traditional payment systems such as credit cards. However, the virtual currency has no backing from any government and is highly unstable.
The search of his apartment also revealed a digital scale, a small amount of marijuana, various white powders and pills, computer equipment, a loaded handgun, and other items.
The arrest appears to mark the first time the federal government has come face to face with Bitcoins, when the DEA managed to infiltrate the infamous Silk Road page, a marketplace where drugs are traded and Bitcoins are the only accepted currency.
“This is the first time this has happened with Bitcoins,” said Adam B. Levine, publisher and head of the website Let's Talk Bitcoin!, which tracks developments in the currency.
Created in 2009, Bitcoins have been a hot investment topic of late and are the currency of choice for online drug dealers and other black market traders.
