Bitcoin Forum

Silk Road Bitcoin Stash To Be Auctioned!

http://www.foxnews.com/tech/2014/01/17/feds-to-sell-28-million-in-seized-bitcoins/

"The U.S. government announced plans to sell a whopping $28 million worth of bitcoins, the volatile digital currency that’s taking the Internet by storm.

Bitcoins are a form of currency, like the U.S. dollar, the British pound or the Indian Rupee. But Bitcoins aren’t tied to any country or even to physical paper or coins at all. Instead, computers “mint” them according to complex algorithms, adding a new coin to a database at a slow but steady rate.

The currency’s exchange rate has seen wide swings, soaring up from about $125 U.S. dollars per bitcoin to over $1,000 apiece in late December. They currently trade for around $800.

And the Feds will soon sell a massive stash.

The huge bitcoin haul -- approximately 29,655 of the digital things -- was formally transferred to the U.S. government several months after it was seized from the server of the black market website Silk Road; the government claimed the digital currency was used to facilitate money laundering, prosecutors announced Thursday.

The action came a day after a Manhattan judge approved the forfeiture of the bitcoins and the website, and three months after San Francisco entrepreneur Ross Ulbricht was arrested on charges he operated an online marketplace for illegal drugs, following a crackdown on the website. He has pleaded not guilty to charges of narcotics trafficking, computer hacking and money laundering.

In a news release, U.S. Attorney Preet Bharara said it was the largest forfeiture of bitcoins ever by the government. He called Silk Road "a global cyber business designed to broker criminal transactions." The website is believed to have collected more than $1 billion in revenue from more than 100,000 customers.

"These bitcoins were forfeited not because they are bitcoins, but because they were, as the court found, the proceeds of crimes," Bharara said.

The prosecutor said investigators also seized more than $130 million worth of bitcoins -- an additional 144,336 -- from computer hardware belonging to Ulbricht, though U.S. District Judge J. Paul Oetken has not yet ruled whether those bitcoins must be forfeited. Ulbricht, 29, has challenged the government's claims to that currency and its insistence that he operated online under the alias “Dread Pirate Roberts.”

Oetken said Wednesday he was ordering the forfeiture of the $28 million of bitcoins and the website because no one had challenged the government's claims to those assets.

Ulbricht has remained imprisoned after a Manhattan magistrate judge cited "powerful evidence" that he sought the killings of individuals he believed would interfere with his business. He is charged separately in federal court in Baltimore in an attempted murder-for-hire scheme."

You have a habit of posting news two days after the rest of the forum has read it.

Just sayin'.

LOL!

Missed it first time around I guess!

;)

SR is a nasty stain on Bitcoin's past.

In what way is it? If it wasn't for all the publicity Silk Road got BTC might not be where it is today.

I agree with you despite an earlier post of my own.

Saying Silk Road was bad for BTC is sort of like saying that the cocaine trade is bad for the US dollar.

My $.02.

;)

That's like saying a handgun is good finger exercise.  Silk road played a large role in the beginning of btc but it came at a horrible price.  The perception of bitcoin as the currency of the darknet is still prevalent and it might take years to fully outgrow that stigma.

Even after its demise,now we have to brace for some huge selling pressure in the near future.

Probably a dumb question, but since it is in their wallet file... why don't they just send it through an exchange?  What do they think an auction is going to produce?

OTOH, it would be a real crap-fest for them if the community rejected the bitcoins and only bit $1/BTC or some super low amount. (Not like that could happen because the community is too diverse... but it would be interesting)

Not really. What was the horrible price? It's pretty much already outgrown that 'stigma' anyway, and the only people who think it's a currency for the corrupt and illegal are ignorant idiots anyway.

The people you call "ignorant idiots" are the people who will take bitcoin mainstream. Dismissing them does not change this.

The perception is changing.  But the reality is we are not done seeing the effect of SR on the price and perception of btc.  No amount of denying it makes it untrue.

I think it's us and the merchants that are taking it mainstream. The general public can only dismiss it for so long. The media hardly ever mentions BTC's connection to the darknet any more now anyway, and when they do it's only in passing.

All I've got to say is take a look at one page of comments on a bitcoin article at any major online news outlet, and you'll see the general public sees it as a "bad thing."  This is what the silk road has done...  no question.

I actually think that SR is a positive about the security of BTC. Yes, it is bad that it's associated with criminals. But, lets face it. There are plenty of people out there who are heavily invested in all sorts of shell companies and much of that complicated paperwork (that can eventually be traced down) can be replaced with simple BTC shuffles. And, those people who use all those shell companies are not generally thought of as criminals. If nothing else, BTC could become the "global off-shore" accounting system, especially now that the IRS is throwing out all those claw back regulations.

You aren't helping the public perception with posts like this.  While less of a crime in public perception, I'm pretty sure they are still thought of as "crimimals" very much so.

Of the comments I read, most are all anti-government and anti-obama?

So, you are saying that all of Romney's accounting staff are criminals? Not to mention that even in my small town are accountants recommended for their ability to shuffle money. It's a grey area, just like derivatives, and completely legal because the point of the shuffling is to keep the information from the public eye (or a spouse, or a business partner, or ... ).  While the general public might not take up with it, I would be willing to bet that there are accountants out there looking very hard at the capabilities of BTC because there is no central report that can be pulled based on your SSN or EIN. It is no different than running a cash based business. And, if you think a cash based business is illegal, then you need to talk to about a bazillion farmers out there who operate almost entirely on cash only.

US Federal law requires the auctioning of siezed properties.

:)

I going to bid with Bitcoins.

But, isn't this a little bit like if they'd seized CISCO Stock Certificates and instead of just selling them through a trading vendor, they put them up for auction?  There is already a sort-of set value for BTC. This makes me wonder if they would auction of stock certificates instead of just selling them through existing exchanges.  Because, if you think about it, the auction site is going to take out a percentage of the value that they get at auction and they're not likely to get a higher bid than the current exchange rate. So, they're almost certain to come out about 10% behind.

How do you think they would pick the lucky exchange? Such sales have to be as clean as possible and sending milions to an owner of a private exchange would raise some questions. Maybe if there was an official government owned bitcoin exchange, but since all exchanges are belong to private investors I can't see any other way than a public auction.

If I were the government I would fast track the SEC approval process for the various Bitcoin ETFs that are in the works, and then liquidate on Wall Street for maximum return.

My thought was they could just put out a straight RFP (Request for Proposal) and making the responses public. The difference is that a RFP only requires a document that provides the information they need to pick an exchange (e.g. how much you'll pay/coin + service fees). All of that can be posted on line for everyone to see.

I guess one difference is that private individuals probably wouldn't go through the RFP process because it might seem foreign to them. I also wonder if the auction will be limited to US bidders or if it will be available globally?

I just looked at one of the auction sites routinely used by DOJ and it looks like they charge a buyer's premium ( "Ranging from 1% to 20%" ) instead of commission, so the buyer will probably be paying the fees.

I'm interested in seeing what type of price bitcoin gets in an auction style format. Will it be cheaper than exchanges, the same, or more expensive?  If cheaper or more expensive than why ? 

I'll be bidding on them myslf until the price goes higher than what i can buy them at from coinbase .

Group buy anyone? lol

To me, all this news is "Bla bla blaaaa" - Why? Because this will bring the price down (media hype).. and guess what? The price is gonna go back up again. Sooooooooo... yeah. This isn't a real .. big thing to worry about. Things will be back to normal the same day, if not, the day after.

I'm waiting until DOGERoad gets shut down and which government agent can keep a straight face announcing an auction for seized DOGE coins.   :D

I'm betting at least slightly below the going rate because (a) the buyer's premium that will be tacked on makes them want it cheaper, and (b) investors usually want a quick and BIG return on their investment. If they go over the current rate, they risk having to wait a longer time to finally be able to cash out at a respectable profit. If you aren't going to make a healthy profit, then why waste time with buying it at all.  -- Of course, all it will take is one (noob?) hedge fund manager to blow that theory out of the water with the belief that they can hold them until xx years and make the profit that way.

So, had to Google that thinking... can't be real... you gotta love reddit ( http://www.reddit.com/r/dogecoin/comments/1tlie9/doge_road_in_place_of_silk_road_lol/ )

Now, I need to watch my cat when she sits on my keyboard. For all I know, she's posting poop on DOGERoad and I'll end up with all of my equipment confiscated while the darn cat just runs off on a yacht with her boyfriend and all their ill gotten gains.

Illegal content is a blemish on the torrent protocol?
People should stop putting BTC on a glass pedestal, it will break.

Anytime a decentralized system/network is created it will always be used for illegal activity.
Silk Road 2 already exists, new illegal sites pop up for BTC all the time.
The way drugs are distributed illegally irl is pseudo decentralized as well,
most dealers/druggies only know their supplier, rarely the whole chain of supply.

I too want to know more about this auction.
Is it open only to US citizens?
How will they go about it so as not to crash the price?
could the rest of the community manipulate the market enough to short-change the FBI when they go to sell?
I would love to see a temporary crash, just long enough to ensure the feds only get about half or less the value of their coins.
Is this possible?

When the government auctions things, they do not do it online.
There will be a auction at a physical place.
None of the bitcoins will be re-introduced to the market until the buyer(s) attempts to sell them.
If the buyer is wise they will slowly disperse the bitcoins ensuring they see their ROI.

If the SR operator was wise he woulda had his hardware encrypted,
and backed up in a way that if something like this happens somebody could move his BTC for him.

I really hope this won't make the price crash.. If it will, then I can only say THANKS OBAMA!

i wonder how much they will start the bidding at?

My thoughts exactly.

They do sell assets online. Here is just a subset of the auction sites used (states can use their own sites as well):

https://i.imgur.com/VJnbMo0.png

Sorry about the image, but it was in a PDF file that is impossible to copy/paste from and I'm too lazy to type it out.