Bitcoin Forum

http://pando.com/2014/01/02/with-130m-of-bitcoin-wealth-and-plans-to-sell-the-fbi-could-rattle-the-virtual-currency-cage/

Being a government entity you can bet on them trying everything in their power to crash the price when they unload..if for nothing else for fun of it

Good. More cheap coins for me.
There is no crashing the btc.

I don't believe they have access to the money so what's to discuss.

This. Stop the FUD here please

This!

If they dump all at once, I'm going to make a small fortune buying up cheap coins.

I agree with all of you obv best situation to buy cause has zero correlation with actual progress of btc but I just bought a lot and read this... haha now what do I do?  sell and wait for it too crash to buy again

Nah they won't dump all at once.  They want to get as much money as possible too.  Plus, all legal proceedings go so slowly, I bet it will be months or another year before they even start selling.  They need the BTC for now for evidence against SR.

I think they'll do it by way of an auction rather than dumping on the exchanges - otherwise, it implies that they recognize the legal status of those exchanges.

so you htink the FBI is going to make an account on Mt Gox or Bitstamp and sell their coins... seriously?

First of all they can't do anything until the trial is over. Secondly if they are going to sell them it isn't going to be on a japanese exchange that you can't withdraw any USD out of, or on an exchange whose bank is in slovenia. use your critical thinking skills...

if they cash out, people would know that it was just 1 single source that was likely to offload its holdings.. probably wouldn't hurt the price that much.

I watch the values from preev.com (combined) or mtgox.

They keep going up, up up...

I would love to see all those silk road bitcoin dumped so we could all buy cheap btc before it rebounds.

I doubt they will be selling the coins anytime soon. At least until the trial is over.

Kinda wondering how the FBI even got to the coins.  Encrypted wallet?  Ya know?

How they got access to the coins will probably never be publicly known. Weak password, old unencrypted wallet-backup, deal with DPR, etc... There are various options available.

Anyway, the coins won't be sold until after the trial is over (including possible appeals). At that point, I guess they'll be auctioned like typical confiscated items. And I seriously doubt the buyer will just dump them on an exchange. In fact, for wealthy buyers that want to play by the rules as much as possible, this batch of coins will be very attractive. For them, buying the coins at a government-sanctioned auction is much better than wiring large amounts of money to an exchange in Japan, Slovenia or Bulgaria to buy coins.

I'm sur, 15 agency, at least, already asked to keep those coins for futur LEO

No worries for 1 or 2 years

Huh?

Don't get your hopes up. The FBI probably will auction off their Bitcoin stash to the highest bidder, this way they have a good chance of having a decent premium on the market price.
All those prominent high worth Bitcoin advocates will stand in line to get a piece off the pie.

Do they even have the private keys, or is the wallet encrypted? I'm willing to bet they can't even touch the coins, and anyone winning the bid on that auction will be stuck with a locked wallet.

They moved the coins to a new wallet which requires control over the original Bitcoin wallet. So yes they do have the private keys.

Scopolamine? Waterboarding at Guantanamo Bay?

 ;)

Chances are that the Bitcoins will be auctioned if he is found guilty, like most spoils of illegal activities used as evidence in Federal court.  It will have basically zero impact on market price, like all other off-market BTC acquisitions.

I don't think anything of it will end in the hand of any FBI affiliated groups.
Once the auction is announced it should generate quite some press interest making sure everybody gets wind of it. Then dealing with a goverment agency this way leaves very little risk of being defrauded, I think even less than dealing with any Bitcoin exchange. That alone is probably worth something, plus the potential bragging rights of having some of those "FBI Bitcoins"

They will not crash it.

The question is, to whom will they auction/sell?
My opinion is... the US gov and/or US agencies and/or the higher echelon leaders/employees affiliated. The US knows the potential (parliment giving the ok confirms this), they are going to keep it for themselves.  I do not see it being offered to the public, not at all. These coins will stay in their hands or in their control someway.
When I first found out about bitcoin and started reading the take down of the Silk Road and possesion of all those coins was the most major thing that got my attention.. then parliment gave the ok and it went above the 1k mark. These 3 go hand-in-hand, not a coincidence. This!... This (the coins staying within the US) is why and what will catapult (using this word is being very Conservative) BTC to the very generous speculated figure amounts ($10+k, $100+K, etc..) that have been stated on this forum numerous times.
The news of Wall St., Overstock, BTC ATM's showing up all over the world and generating the profits that they have in such a short time, Real Estate agencies taking it as payment, buying Lambo's and trips to space, Central and South Am and the possibility of Amazon taking it as payment is only more reason to get in now and get all you can while it's still in the 3 digit range.

These coins will find their way to the US reserve.

I doubt that FBI will sell the coins at all.. They will probably scramble the source and use the coins to fish out criminals from the tor market community or any other criminals that have started to use bitcoin in their ventures. Bitcoin properties give a nice edge to orginized crime in it's efficiency in handling value. I think that in a byrocratic perspective, it's easier to keep confiscated coins and use them as an asset, then to sell coins and buy back coins later when needed.

I do hope they sell

a) Brings the price down
b) Gets the coins out of government hands

I don't think it's likely the FBI would dump all the coins at once, for some reasons stated above.

If they did though it could lead to a decrease in value which could lead to a quick panic sell but news would quickly spread that it was just the FBI exchanging BTC for Fiat and nothing related to anything BAD about bitcoin.  In fact many people would view it as a positive because it would give a signal of bitcoin being more legitimate if a government agency was using it to do exchanges.

From what we've seen in the past from panic sells the most likely outcome is people would quickly buy back in at better prices and the price would rebound fairly quickly. Especially considering in a case like this the price drop wouldn't be related to any bad news , simply a normal transaction taking place.

Also it's worth noting that in a large case like this involving 100's of millions of dollars, an international drug "king pin", and multiple murder for hire charges  this case isn't likely to be resolved anytime soon. It could realistically be years before those bitcoins were no longer needed for evidence in this trial,  by that time it could be true that such a large transaction wouldn't have as much of an impact. Also even ones the bitcoins are no longer needed for evidence (which could be years)  it's likely the government would still debate back and forth a bit on what to do with the bitcoins, and government tends to move very slow so it could also be awhile before they decided what to do with those bitcoins.

Might even make the government rich if they hold the coins long enough and bail out the debt :)

Them dumping all the coins at once (if they even get access to them) would actually be the best case scenario for us.

We would know it's them dumping, the price would tank, and we would get all their coins dirt cheap and won't have to worry about them any longer.

Thanks to FBI, currently the US government is already the biggest bitcoin owner when comparing to all the other governments on the planet, they have the biggest motivation to support this economy

I'm pretty sure they said they were going to sell the coins ..... someone can correct me if they didn't

What reasons do you have to believe that?

Why? Do you think they need the money right now? Of course they won't sell. Everybody is bullish for Bitcoin this year, including the FBI! Even all the bears on this forum are bullish!  ;D

There is no way the FBI will sell any coins for at least 2 years in my opinion, and only then might they pass some to the treasury as a way to control the price.

Basically the FBI has to sell them, unless special legislation would be passed which would allow the FBI to speculate on seized assets, which makes no sense. What remains is using them for some sort of sting operation to flush out other blackmarket sites, but I don't think that is really an option since it's hard to hide where the coins come from.
Are you really that ignorant about how the world works?

Ignorant? What do you mean? Considering that the US government is working out how to cater for Bitcoin's success do you not think they would want reserves of their own? Right now there is speculation going on with fiat currencies: does that mean that the government or FBI is not allowed to hold fiat currencies?

Why? Because I read a report saying the FBI intended to sell the coins, that's all.

I think it's pretty clear that they got a hold of the coins as a result of a deal with DPR. He was stupid enough to get caught doing something illegal, but I don't think he was stupid enough to not properly encrypt his wallet.

If I was him, I'd be scrambling to make all the deals I could to avoid spending the next 40 years in prison.

Just a thought: can`t we just hard fork bitcoin to invalidate the coins in posession of the FBI?  ;D

What about mindreading devices?

Put on your tin foil hats! Protect yourself from the Illuminati.

LOL

I guess we'd better ask Edward Snowden.

 ;D

Yes, sorry, there is the "report". But the article is just speculation ( :P present company accepted). Anyone can see that. So someone made an off the cuff comment to a hack: "This is kind of new to us. We will probably just liquidate them.” That doesn't mean much really. Remember that this comment was, according to the article, immediately after the Silk Road raid, which means before the Senate hearing, recent price rise, etc.

It flies in the face of common sense right now to say that the FBI will just "liquidate" their stash.

It goes against just about everything I believe in, and yet I can't help but love that idea :)

yes indeed. I do not want to steal/invalidate someones money, but if we can just invalidate the coins in possesion of the FBI, it would be great :D

It would probably cause a hard fork with 2 existing bitcoins:
The ones accepting the FBI-coins, and the other ones :P

Maybe this is a great altcoin idea LOL

i don't like the idea of invalidating those coins. it would be a big waste. imagine this as a universal rule, everytime coins landed in the hands someone we don't like. there would soon be no coins left.

ok, let us distribute them equally to all other adresses. Number of coins received depends on number of coins in the account.
But bitcoin is infinitely divisible, i do not really see a problem :)

anyway, it was a thought experiment. Although, a Bitcoin fork/altcoin without the FBI-coins is a nice idea ;)
I already have a name: PureBitcoin (PBC) ^TM

No the US goverment isn't "working out how to cater for Bitcoin's success". The hearing on virtual currencies was to prevent money laundering and provide some legal margin for companies.
If you think otherwise you are even more delusional than I thought.

Why is that different from "catering for Bitcoin's success"? Surely that's why they want to "prevent money laundering and provide some legal margin for companies" isn't it?

Please enlighten me as to where I went wrong!  ;D

Doesn't look like the same thing to me.

One example:

Chairman Carper Applauds FEC Quick Action on Bitcoin Campaign Contributions Policy
Friday, November 8, 2013
WASHINGTON- Today, U.S. Senator Tom Carper (D-Del.), Chairman of the Homeland Security and Governmental Affairs Committee, issued the following statement in response to the Federal Election Commission's (FEC) draft decision to allow Bitcoin contributions to campaigns, as reported by Politico last night.

“This apparent decision by the Federal Election Commission (FEC) underscores what our Committee has recognized for some time: that virtual currencies are not going away. Their emergence has potentially far reaching implications for the federal government and society as a whole. I applaud the FEC for acting quickly to recognize this and develop a thoughtful policy that gives donors and committees rules of the road to utilize this emerging technology. It continues to be my hope that departments and agencies are working together, in a collaborative fashion, to define and consistently treat Bitcoin and other virtual currencies. I expect this decision and other recent developments will be discussed at our Committee’s upcoming hearing, as we dig into what a whole-government approach to this new and unique technology may look like.”

One senator making a non-negative statement equals the whole goverment "catering for it's success", right.
On the subject of your example, did you it's not allowed to spend Bitcoins received for campaign donations? ;D

What are you talking about? Tom Carper is the Senator charged with being the intermediary between the US government and Bitcoin at the moment. Didn't you know that?

Read this: http://techliberation.com/2014/01/02/help-me-answer-senate-committees-questions-about-bitcoin/

Tom Carper is asking questions on behalf of the government.

And by the way, the news that you are not allowed to spend the Bitcoins received for campaign donations is good news. It means they want to "Hodl" too!  ;)

But seriously, get with the program. The US government is working out how to cater for Bitcoin's success. End of story.

Parroting what you just have written doesn't suddenly make it true.

My first ever ignore!  :D

EDIT: seriously though, read this before answering again:
http://techliberation.com/2014/01/02/help-me-answer-senate-committees-questions-about-bitcoin/

congrats.

Yet another thread about the FBI coins?  Learn to use the damn search function!

They will auction them off just like they do every other asset they take during their investigations.

/thread

you really need to put down the kool-aid...

also, the world tends not to care about "your opinion". there are these things called facts that take precedence :P

--arepo

Don't EVER sacrifice fungubility of Bitcoin. EVER. FOR ANY REASON.

But it's all opinion in here!

that's a damn shame. electric would be nearly my last ignore, if i was so inclined. the fact is you're extrapolating things from your own personal opinions and forgetting that not everyone thinks the same way about bitcoin.

"just the place for a snark," the bellman cried, as he landed his crew with care --
supporting each man on the top of the tide by a finger entwined in his hair!
"just the place for a snark! i have said it twice! that alone should encourage the crew,"
"just the place for a snark! i have said it thrice! what i tell you three times is true..."

OK. Forget the "ignoring". Let's focus on the topic. Can I ask you a serious question?

Please read this first: http://techliberation.com/2014/01/02/help-me-answer-senate-committees-questions-about-bitcoin/

Would you say that the impression I got from reading this and other diverse sources of information, the impression that "the government is working out how to cater for Bitcoin's success", is "delusional"?

"the government" is not a single, monolithic entity so it's not necessarily delusional it just doesn't make much sense.

the FBI, however, if some sources are to be believed, have a specific and precedented way to deal with seized assets which will likely not be changed without due process.

OK! Thanks for your balanced response.

This is the most important and pretty much only point made in this thread.  An attack on the fungibility of Bitcoin is currently the only real threat to Bitcoin I see from LE, GOV or from within.

It was just a thought experiment ;)
I like the purity of Bicoin as it is now...

But think about a world were government tries something like coinvalidation, bitcoins are stolen from the regular people for "legal" reasons,  and bitcoin taxes are collected by the government.
In that case, I think it is fair to try to invalidate the colected taxes and the deny the coin validation by hard forking Bitcoin and implement the "PureBitcoin" :)

We could create a list (yes, I know... This will be difficult to implement on a peer 2 peer basis) which excludes certain adresses and the coins send to those adresses are not accepted by the network and send back to the previous address.
So we create a parallel PureBitcoin where the people do not pay taxes and bitcoins are not confiscated by the government.

Naturally, the original bitoin will still exist, and an exchange rate between the 2 will be established. The market will decide which coin is preferred.

Standard practice is keyloggers and to arrest the person when their account is already open.  Encryption?  What encryption?  They have it in the keylogger record.

They're the FBI, not the CIA.  (US Citizens are treated differently than foreigners...)

They may use some of the seized coins for this after auctioning in order to catch bad guys.  Of course, if I were a bad guy, I would never accept a bitcoin that could be traced back to that address.  But bad guys aren't usually smart (or they wouldn't be bad guys).

These are different agencies that barely talk to each other.  The US government isn't as corrupt as most of you think.  They are required to auction seized assets by law.

If you can convince 51% of the miners to screw the most powerful government on earth...  Probably not happening.

This is not about corruption. This is about a potentially huge game-changing financial technology arriving much faster than anyone is anticipating.

Do you honestly think they will just auction them like any old junk confiscated from criminals?

Until they feel like they understand Bitcoin properly (which could take a while) those coins will not go anywhere.

1. US agencies generally don't conspire with each other in grand plots.  They might ask for help on a single given issue (one arrest), but they don't scheme to invent new rules.  "Hey, Senator, this is so-and-so from the FBI.  I have these coins here and we don't want to auction them.  I want you to hold a hearing with Treasury, DHS and SS and, oh yeah, make sure the SS guy is against it to make it look good.  And let's have some guy tie it to child porn for an hour just in case we need to kill it later."  <-  That didn't happen.

Yes.  I am 100% certain that they will follow the law and auction them once the trial is over.

Until the trial is over and DPR is found guilty, these coins will not go anywhere.  As soon as he is found guilty, they will be split up into lots and auctioned publicly.  I can assure you that this will happen.

But what are Bitcoins? What is the value of a Bitcoin? Is Bitcoin a currency? Tell me, do the FBI auction currency when they confiscate it? What do they do with US dollars?

What if the government decides to classify Bitcoin as a currency? What if the US government classifies Bitcoin as an asset but the Swiss government a currency? I really don't think that the solution to the FBI's coins is going to be as straightforward as you think.

No, creating a list leads to centralization and a weak point.

The FBI will not care what "Bit coins" are.  They will follow protocol.  They will find out what they are worth when then sell them at public auction.  That is what they do. 

Can you answer the currency question?

Sure.  If they can deposit it at their bank and convert it to USD directly they will do that otherwise they will auction them off.  If they confiscate pesos they just deposit them.  If they confiscate gold they auction it off.  It will depend on the situation two or so years from now.

I Just read this article:

http://www.coindesk.com/fbi-proves-seizing-bitcoins-isnt-owning/

Seems they probably don't have his encrypted wallet at the moment. Like you say, that's a great bargaining chip!

what if they treat the BTC like seized drugs? just delete his wallet and wipe his hard drive? I don't actually think this will happen, but since BTC is in regulatory limbo (kinda) I can't see the FBI doing much more than leaving it in cold storage. Why would they participate in a "grey" economy? especially when they know the whole BTC community is watching very closely.
anyhoo, they have to convict DPR first. Then figure out how to actually use BTC, which I'm guessing they are relatively clueless about still. which could lead us back to deletion of wallet (only by accident this time, lol)
I would actually LOVE to see the FBI accidentally delete all those BTC.

I think the FBI will keep it, especially if the trial leads to a conviction ("drug money" and other seized assets are kept by the government upon conviction, providing a nice revenue stream that many say leads to overzealous enforcement of drug laws when the local police agency is feeling a little poor).

It could provide the USA with a storehouse of Bitcoin, in much the same way as Fort Knox provides a storehouse of physical gold.  If Bitcoin takes off in the future and becomes more widely accepted, this could prove quite useful to the government as an asset.

From the coindesk article:

"The FBI has told Forbes that they will sell their bitcoin holdings after Ulbricht’s trial."

thank you. the likely outcome of this issue is mainly resolved. the other discussion in this thread is worthwhile but speculating on the FBI's actions is futile at this point.

Why is speculating on their action futile, especially since they have publicly announced what their action will be ....

this is precisely what i mean. perhaps "speculating", having two meanings, was not the best word to use to avoid this miscommunication :P

I think a decentralized list is possible ;)

The point is that any lists of "good", "bad" and "ugly" coins is a bad idea.  Hopefully we will quickly implement changes that will prevent lists.  Things are being talked about and worked on.  Here for example:

https://bitcointalk.org/index.php?topic=279249.msg4302095#msg4302095 

^^This

Read the thread.  The FBI has already said they are going to sell them.

"Err... this is a bit new for us... we'll probably sell them" is an offhand comment made to a hack before the Senate hearing, latest run up, etc. No-one knows yet what will happen to those coins.

Like the proceeds of any crime they will almost certainly be sold.

If they sell on an exchange it will cause immediate panic the minute those coins move into MtGox/Bitstamp.

However that won't happen. There are no reputable U.S exchanges yet and no regulation around their exchange. Instead the coins will go to an auction like every other seized asset so there won't be an immediate cause for concern. What happens after they bought depends on who is buying them

At an auction, they would most likely be sold off in "lots" to get the maximum revenue.