With SilkRoad shutting down, and BitCoins being seized, what does this mean for bitcoin? Over the past 2 days, it has come to light that the online market place SilkRoad has been seized by the FBI. Also, they have seized $3.5m worth of BitCoin (which must've been in Escrow).
http://www.bbc.co.uk/news/technology-24381847
http://arstechnica.com/tech-policy/2013/10/feds-shut-down-silk-road-arrest-alleged-admin-dread-pirate-roberts/

What does this mean for the BitCoin cryptocurrency - can we expect a sudden increase in the value of a BitCoin? Or because BitCoins biggest source of transaction is shut down, will we see a sudden crash?

The above does not have to be strictly related to the amount that was seized - it can be influenced by peoples view of bitcoin after the seizure of the money.

Also, is BitCoin itself in trouble for "money laundering" or anything similar?
Bitcoin being seized

The bitcoins on SilkRoad have been seized by gaining access to the private keys of the SilkRoad's wallets. Government agencies have seized bitcoins once before in a similar fashion from a customer of SilkRoad. $3.6m are somewhere around 30k Bitcoin out of the around 11.75m currently existing. For comparison more than 500k BTC have been transmitted in the last 24h according to Blockchain.info. The amount that was seized is economically insignificant and as it probably will be held as evidence for the trial, will not have any influence on the bitcoin market itself.

SilkRoad being shut-down

Bitcoin has plenty of legitimate reasons to be used, so that this one illegal reason should not be all that important.
Bitcoin is useful for/because:


International money transfers (superior speed, reduced cost, however you have the currency risk)
Faster and cheaper for shop owners compared to credit card payments
No exposure of credit-card information when online-shopping
Solves a bunch of problems for services such as porn merchants (no chargeback (buyer's remorse is a big problem for them), pseudonymity, fast, cheap, easy)


Bitcoin has started building a lobby (Bitcoin Foundation, Angle Investors, Investment Trusts, Exchange Traded Funds) and businesses (Exchanges, Webstores, Mining equipment manufacturers, Gambling) have been gathering investments, so that there is funded interest to keep bitcoin going.

I don't think that it was particularly unexpected to see SilkRoad shut down and don't think that it will be a bad thing for the bitcoin project. If anything, it might prove to be an opportunity for the bitcoin project to show that it has evolved beyond just shady use-cases.