US Marshal’s Auction Off Silk Road Seized Coins

US Marshal’s Auction Off Silk Road Seized Coins

[heading]US Marshal’s Auction Off Silk Road Seized Coins[/heading]

The US Marshals announced this week that they will be auctioning off almost 30,000 bitcoins that were seized in the Silk Road raid, but not those from the computer of Ross William Ulbrecht, allegedly known among Silk Road users as “Dread Pirate Roberts.” The coins are worth altogether nearly $18 million USD.

Reddit user “ozme” posted the link to the online notice Thursday afternoon, and another user noticed before that the FBI had moved from one bitcoin wallet to another.

The 29,658.80613651 bitcoins located in an online wallet have been monitored by bitcoiners via the Blockchain public ledger.

FBI-bitcoin-wallet

The US Marshal’s are requiring any potential bidders to wire them $200,000 as a deposit and requesting that potential bidders declare whether or not they have a relationship with Ross Ulbricht:

“Please describe any contact, communication or other relationships between the Bidder and/or any Control Person with Ross William Ulbricht or the Silk Road, or anyone whom you know to be acting on behalf of Ross William Ulbricht or the Silk Road…“The USMS will not sell to any person who is acting on behalf of or in concert with the Silk Road and/or Ross William Ulbricht, and bidders will be required to so certify.”

The 30,000 BTC from DPR’s account do not represent the entirety of the government’s total bitcoin holdings, all of which came from the Silk Road raid. More government coins, which will be kept and not sold, are held in another wallet of 144,342 coins or $87 million USD. Does the US Marshal service need a Money Transmitter License? The first line in their document reads:

“THIS NOTICE DOES NOT CONSTITUTE AN OFFER TO SELL BUT INVITES INTERESTED PARTIES TO SUBMIT A BID FOR PURCHASE.”

Perhaps that alone precludes them from the requirement?

Here are the “Required Registration Items” for interested parties:

  • A manually signed pdf copy of the Bidder Registration Form
  • A copy of a Government-issued photo ID for the Bidder (or Control Person(s) of Bidder)
  • $200,000 USD deposit sent by wire transfer originating from a bank located within the United States (please provide receipt of transfer)

Many bitcoiners on the Reddit thread posted that some inside trading based on this information might have caused the price of bitcoin to drop from $620 last week all the way to $550. At the time of writing, the price has rebounded to $600.

Some believe the price will rebound quickly in the medium term. Many people might be eager to get their hands on such a big chunk of bitcoins all at once without the risk of moving the price up 10%, as such large purchases generally would.

Why are the feds selling the bitcoins before the end of the trial of Ross William Ulbrecht? Generally evidence is kept until the trial is over, but this will be an interlocutory sale of property, which is generally done in situations where the seized goods “are perishable or are susceptible to deterioration.”

It appears the federal government is selling bitcoin because they believe they could lose money if bitcoin were to drop in price.

 

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