Bitcoin Forum

Source: http://rt.com/usa/165692-bitcoin-silk-road-siezed/


The US government is set to auction off $18 million worth of bitcoins seized from an online drugs market known as Silk Road. The Department of Justice is looking to make a considerable windfall from the sale with bitcoin increasing in value recently.

Bitcoin fever? Here’s another story: New bitcoin app provides financial incentive for future leakers

The now-defunct cyber-black market was closed down in October of last year, with authorities confiscating 30,000 bitcoin. The FBI also arrested the alleged kingpin of the online drugs bazaar, Ross Ulbricht, seizing roughly 144,000 bitcoin in the process.

Ulbricht, also known by his alias Dread Pirate Roberts, now faces charges of computer hacking, money-laundering and conspiracy to traffic narcotics. He denies all of the charges set against him, but insists the bitcoin are his and has demanded their return.

Nine months on the US Marshals service – the body tasked with selling off the seized assets – is preparing to auction 30,000 bitcoin of the Silk Road stash.

"This auction is for the bitcoin contained in wallet files that resided on Silk Road servers," the US Marshals Service wrote in a press release. "This auction does not include the bitcoins contained in wallet files that resided on certain computer hardware belonging to Ross William Ulbricht that were seized on or about October 24.”

The sale of the bitcoin will take the form of an online auction which will take place on June 27. Participation in the auction will not be cheap, with buyers required to make a refundable deposit of $200,000 to a government bank to take part. The bidding itself will take place over a period of 12 hours where blocks of 3,000 Bitcoin (or about $1.8 million each) will be up for grabs.

“Bids will be accepted by email from registered bidders using a form available from the US Marshals web page,” says the release.

The government’s decision to sell off the bitcoins could cause a significant shake-up on the crypto currency market. Many worry that if Ulbricht’s larger stash of 144,000 is sold in the same auction style as the Silk Road asset, the market will be flooded with cheap coins which will lower the value of the currency.

After the Marshals’ announcement of the auction, the value of bitcoin dropped by around 2 percent, reflecting market anxiety.

There is speculation as to why the government has decided to auction off the bitcoin. Ulbricht’s lawyer Joshua Dratel believes US Marshals service may have planned the sale to coincide with the recent upturn on the bitcoin market.

“I wouldn’t be surprised if they’re watching the price of bitcoin on the market just like everyone else,” he told Wired.

Note to self: Big BTC price drop on 06/27/2014.  Got it!

This is old news. Hopefully they don't auction off to a idiot, because my boy, if they do... The price might drop down again. A real investor would know to keep them until the value raises higher.

Actually this is extremely bullish good news, people used to be afraid of the FBI dumping on an exchange. Whales will buy these coins looking to make a good profit, not a quick "dump".

It's not that simple. Whoever buys that much is probably playing this game on long run and knows that if he dumps that on market he will loose more than he paed for as market is not deep enough. It's eather keepers game, or sell little by little to maximize profit.
Of course, ppl will panic on 27, and price will fall, but w/o real reason. I just hope i will have somehing to buy BTC with by than.

 3000 bitcoins at once in auction   . but whats the initial bid ? 200000$

Yes, anyone buying these coins will most likely be doing so in a long position.  Would be idiotic to buy them just to lose money by dumping them on the market (depending on how high the bidding goes)...

Bad news for the short term, as it can trigger panic sellers before and after the event. But for the long term, this legitimizes crypto currency in the US, because it would be very hypocritical of the government if they imposed laws against bitcoins, meanwhile one of the government branch is selling it themselves.

You are likely correct to say that whoever buys the coins would not be in it for the long run, but it is hard to say just how quickly they would sell.

It is also likely that the price of BTC would fall in advance of this auction, further depressing the value these coins fetch.

that's the reason why the BTC price is drop, dumping many BTC

People here on btctalk worried about this auction are either nuts or naive. No one who has made millions of dollars in their life is going to be bidding for Bitcoins to "dump" them on the exchanges at what they paid for or less, in fact they will most likely end up overpaying and drive the price of BTC up for the whole market.

You wanted Wallstreet to come in and inject some major capital, well here you go this will be it.

So is it all or nothing? 30,000 in one go? Or will they auction it off piece-meal?

3,000 btc blocks.  A whale buying 3,000 coins off a exchange at once would drive the price way up.  If there are alot of bidders the price could be above market and launch a bubble.