I've been reading on it and it seems they kept in escrowe the Bitcoins until the package had been marked as "Shipped"?
Was there a central wallet that one would send/receive coins from or was it flushed on the in/out through random wallets? Can the blockchain be traced to DRP's primary wallets?
From memory (which may be wrong), it sounded like he had something like 11 internal hot wallets, but while the coins were in escrow he used a database to link what user had what amount of coins. The government seized those 11 wallets, and based on the average daily holdings, now have like $3mm worth of BTC which they transferred to a single wallet (if you google, you can find the public record of that govt controlled wallet).
The indictment also explains that Silk Road used a "tumbler", which would route the BTC's through a series of random wallets so that it was not possible to match a user's initial sending of BTC to Silk Road with the eventual withdrawal by a seller of BTC's to another wallet or exchange.
Government seized real and tangible personal property is regularly either used by government or auctioned off, so I don't see why bitcoins would be any different.
Most vendors would ask for early FE or no product would be shipped but that was too risky for most buyers. FE was supposed to occur when the buyer received the product and gave it thumbs up.
I could assume that major vendors with high ratings could do early FE as their means, but would unrated vendors have to essentially front and hope that the buyer would FE?
Was the FE ever automated based upon FedEx/UPS tracking numbers?