A man running a successful drug trade online had millions worth in virtual currency confiscated by the Finnish state - "After confiscation, the value has gone up like a rocket"

A man running a drug trade lost such an amount of bitcoins to the state, that it equals about half the worth of illegally earned wealth confiscated by the customs in one year.

The amount cashed in by the state is 1,666 bitcoin. Their worth on this Friday is 13-14 million euros. The course varies wildly.

The bitcoins come from Lassi Juhani Karkkainen, the runner of an online drug business called Dopeshop, and whose sentence of 10.5 years was made official this week, when the supreme court denied his appeal. He comments the loss of bitcoins as follows:

"I don't doubt it'll go into good use in those hands. Most of the money is profit from an illegal business and its capital gain, the confiscation of which is justifiable from society's perspective", Karkkainen comments.

He answered HS's questions from prison via email, which he is occasionally allowed to use. During his jail time, Karkkainen has also updated a blog.

"However, there is no sense in imposing compensations greater than the actual income [profit], as is done in Finland. The only thing achieved with that is marginalising people out of society."

Karkkainen's bitcoin money has caused a situation that could never have been imagined before virtual currencies came to be. Bitcoin's worth has exploded, after customs confiscated the money from Karkkainen in summer 2016. One bitcoin was 600 dollars back then, when last December it was over 19,000 dollars. After that the value has weakened again.

"Bitcoin's decline in 2014-2015 turned out to be my loss, whereas the rise in value after 2015 turned out to be the state's benefit. All the expenses fall upon me, as well", he says in an email.

Karkkainen has therefore made millions worth of money for the state, because he used bitcoins instead of euros. The Turku court of appeal sentenced him to lose his illegally earned money specifically in bitcoins instead of euros.

The customs office intends to sell the bitcoins during the spring.

Karkkainen regards it is obscene that he is ordered to pay half a million euros for the actual restitution.

"In a sense it is right, that the capital gain is taken away, but in a complementary fashion the expenses and decreases in value should be compensated for, as in, only take away what was illegally profited. There is a notable flaw in this, where the state collects all the profit gains and the criminal pays all the losses. The principle used in the court is the gross profit rule, which in substance crime is the total sum of the sale. Exactly this is what leads to massive debts, even though the full amount of illegally made money has been confiscated already", he says.

He compares the practice to Swden. In Sweden, the supreme court stated recently that the costs for purchasing the substances should be reduced from the sale prices, and therefore only the net gain can be confiscated away.

"I have not been jobless for a day before the sentence; I have made a 15-year career in IT and profited from my salary to such a degree, that I have kept the money coming from Silk Road entirely separate from my own economy. The protection of property is sitting on a frail basis, if all legally obtained property is confiscated on top of the drug money. Practically, I will lose my home and all other property, and still remain in debt, which I have no chance of paying back. The criminal profits expire in 20 years, so in 2037 I will be freed from the recovery proceedings", he says.

Silkroad was a marketplace in the anonymous Tor network, where Karkkainen made drug deals.

"The next step is the European court of justice, but I will not stop to wait for a resolution from there, and will instead continue my life. Minimum security prison allows studying at a university campus, so I will be finishing my master's degree", Karkkainen tells.