If they do, when will the FBI announce to sell their alledged 600k BTC stash?

[Spekulatius]

This post tries to explore the point in time most likely that the FBI or any other entity in their place may announce the sale of their 600k BTC stash (78M USD at current prices).
Given they do so AT ALL. Representatives asked what to do with their seized Bitcoins have already announced that they will most likely "just liquidate them." after the trail. That goes for the already seized 26k BTC (worth 3.38 M USD at current prices) of Silk Roads hot wallet as well as the alledged 600k BTC in comissions, still held by Ulbricht in some wallet encrypted with a password possibly only known to himself. The guy is facing a life long sentence in prison if not for his drug business alone then maybe for some of the other charges brought up against him (including attempted assassination). This makes his vast fortune mostly useless to him and may be part of a bargain he strikes with prosecutors to drop charges or buy him lesser time in jail.

Just imagine the market's reaction the day it learns that 5% of all BTC in existence will be sold into the market after trail is over..

If it is exactly 600k BTC or maybe less is not so much important, as it will be a VERY large sum anyway. The more important question is WHEN the authorities announce that they have taken control over the money and will thus sell it into the market after the trial.

1 vote per user

[dddbtc]

“That incorrectly understands BTC and its use,” says Patrick Murck, general counsel at the Bitcoin Foundation. “1 BTC could change hands 9.5m times and generate ‘sales revenue’. In addition, many people don’t realize that, for the majority of Silk Road’s existence, the value of 1 BTC was less than $7 USD. It is only as recently as March 2013 that the value has risen over $100 USD.”

80million dollars is way over the top.  He still probably has a bunch of BTC somewhere that they haven't found yet.  Some were probably liquidated by DPR 'n friends somewhere along the way as well.

[wachtwoord]

It's not like there will be more Bitcoins after the liquidation than before so the value won't change. If they do liquidate the BTC all at once and it will be that many there will be a very high amount of slippage probably and it will be a great buying opportunity. No idea how such a liquidation process takes place though.

If they don't get the 600k BTC and DPR dies with them then there will be 600k BTC less in circulation and the value of Bitcoin will be up 2.85% overnight (0.6/21).

[Spekulatius]

The FBI doesn't have 600k bitcoins, that's an estimate for what could be left that they haven't accessed.  That money may die with DPR in prison.  It could've already been partially liquidated by DPR.

The real question is what will they do with the 27,000BTC they actually have as of this moment in time.

They already indicated to sell them after the trial.
http://www.forbes.com/sites/kashmirhill/2013/10/04/fbi-silk-road-bitcoin-seizure/

[Spekulatius]

It's not like there will be more Bitcoins after the liquidation than before so the value won't change. If they do liquidate the BTC all at once and it will be that many there will be a very high amount of slippage probably and it will be a great buying opportunity. No idea how such a liquidation process takes place though.

If they don't get the 600k BTC and DPR dies with them then there will be 600k BTC less in circulation and the value of Bitcoin will be up 2.85% overnight (0.6/21).

I wonder if they even care. Maybe they think its fun or some kind of revenge on the SR community if they crash the market. Do they really need those peanuts caught in slippage?

[wachtwoord]

It's not like there will be more Bitcoins after the liquidation than before so the value won't change. If they do liquidate the BTC all at once and it will be that many there will be a very high amount of slippage probably and it will be a great buying opportunity. No idea how such a liquidation process takes place though.

If they don't get the 600k BTC and DPR dies with them then there will be 600k BTC less in circulation and the value of Bitcoin will be up 2.85% overnight (0.6/21).

I wonder if they even care. Maybe they think its fun or some kind of revenge on the SR community if they crash the market. Do they really need those peanuts caught in slippage?

Peanuts? Liquidating 600k at MTgox would lead to 69827353.77905 USD in slippage. Or nearly 70 M USD in slippage. They would get less than 12 M USD for the coins. And that's gox Stamp likely has less depth. If they are going to do this I'm going to have to think seriously about liquidating part of my stock portfolio. It would be close to getting a donation from the US government ...

Edit:

On Stamp the total buy order sums up to 184977.52, so you could buy the remaining 400k+ BTC for <$0.01 a piece if they liquidated there. Must be fun

[repentance]

The protective order obligates them to hold them until the civil complaint has been determined.  In real terms, that means until it's been established - either by trial or by a plea - that any of the offences which allow confiscation of the assets (including the BTC) have been committed.

The spokesperson said that they would "probably" liquidate the seized BTC.  They could, of course, fake the sale and hold onto all of them for use in future law enforcement operations.

If they are sold, it will likely be by public auction and not some method which allows purchasers to remain anonymous.

[Kao]

The protective order obligates them to hold them until the civil complaint has been determined.  In real terms, that means until it's been established - either by trial or by a plea - that any of the offences which allow confiscation of the assets (including the BTC) have been committed.

The spokesperson said that they would "probably" liquidate the seized BTC.  They could, of course, fake the sale and hold onto all of them for use in future law enforcement operations.

If they are sold, it will likely be by public auction and not some method which allows purchasers to remain anonymous.

They might have to hold onto them until all the appeals are exhausted, otherwise they could be stuck in a situation of having to pay the cash equivalent (either for the price that they sold it at or the price that they are at when they lose the appeal, although the latter seems less likely).

How would faking the sale work? They'd say they sold them and hold them for operations? That strikes me as questionable compared to just buying new "untainted" BTC to use. This is especially true since BTC is very traceable by design so unless the FBI is willing to launder the money through a mixer, which would be difficult, time consuming, and expensive (since each mixer takes a cut) it would be useless for operations.

I have to agree with you n your last point. They'd go for a discount which would make someone a quick profit since they could, and if they were smart would, immediately turn around and sell them as the market will bear on MtGox.

[repentance]

How would faking the sale work? They'd say they sold them and hold them for operations? That strikes me as questionable compared to just buying new "untainted" BTC to use. This is especially true since BTC is very traceable by design so unless the FBI is willing to launder the money through a mixer, which would be difficult, time consuming, and expensive (since each mixer takes a cut) it would be useless for operations.

Use seized money to buy some of the BTC at auction so that they appear to no longer be under federal control.  How are those that care going to establish which buyers were legitimate and which buyers were government agencies - the BTC are going to be transferred to the addresses of the buyers following the auctions so they don't need to send them through a tumbler. 

After that first transfer, you really have no idea whether subsequent transfers are the address holder selling their coins, using their BTC to purchase something or transferring the coins to another account they control.

[ProfMac]

The protective order obligates them to hold them until the civil complaint has been determined.  In real terms, that means until it's been established - either by trial or by a plea - that any of the offences which allow confiscation of the assets (including the BTC) have been committed.

The spokesperson said that they would "probably" liquidate the seized BTC.  They could, of course, fake the sale and hold onto all of them for use in future law enforcement operations.

If they are sold, it will likely be by public auction and not some method which allows purchasers to remain anonymous.

Perhaps they would like for an exchange to be legal and operational. 

[kik1977]

Are you asking:

When will they sell the bitcoins
OR
When the will make the announcement that they (in future) are going to sell those coins?

In the latter case, the announcement has been made already..

[crazy_rabbit]

I think they would have to wait until after he is found guilty. Even then, I hope the keep it.

[Dabs]

One of the bigger bitcoin entities or businesses or foundations will buy them. If it's even available to be spent.

[crazy_rabbit]

One of the bigger bitcoin entities or businesses or foundations will buy them. If it's even available to be spent.

Yeah, I suspect your right. They will probably auction it off.

[kik1977]

I think they would have to wait until after he is found guilty. Even then, I hope the keep it.

There are several possibilities.

The State can usually sell seized stuff before the judgement only if they could seriously depreciate or die. In many instances food or live stocks were seized and they must be sold immediately. Don't think bitcoins can fall in this category.

In 99% of the cases, nothing is done until the judgement. Then, if the suspect is found guilty and the assets confiscated, they can be sold. Please note that it's not a choice, they MUST be sold. Or destroyed in some particular cases. So no, they cannot "keep" them.

But there is also the possibility of being acquitted, in this case the goods seized return to the legitimate owner. That's why the FBI cannot spend them before the judgement.. moreover part of them (only a few to be honest) belong to honest sellers and they will be probably returned to them when the case is closed.

[wachtwoord]

moreover part of them (only a few to be honest) belong to honest sellers and they will be probably returned to them when the case is closed.

How? "All drug dealers who we still owe money please come over and pick them up?"

[kik1977]

moreover part of them (only a few to be honest) belong to honest sellers and they will be probably returned to them when the case is closed.

How? "All drug dealers who we still owe money please come over and pick them up?"

No, rather: "Mr. X, owner of the account xxxx who was selling second hand books on the SR, after a review of your specific account, we have found it wasn't against any Law of this country. Please provide us with a BTC wallet where your bitcoins can be returned to you. Regards. Ps. please excuse us if your funds have been frozen for the last three years. Shit happens."

As I said this would apply to a very few people, probably no more than 0.01% of the accounts on SR. That's what I meant

[klondike_bar]

All that the FBI has is 26,000 BTC and a HDD/computer with DPR's encrypted wallet.

1) the wallet is encrypted, so whatever it contains does not belong to them until they obtain the private key - hacking/decrypting is not a possibility
2) DPR almost certainly used some of his coins to pay for things or trade for USD. It is likely that the wallet holds <300,000 coins at the most
3) It is almost unconceivable that DPR did not create a backup of the private key, or some form of "dead man's switch" that makes it easy/automated for the FBI's precious wallet to drain anywhere else in the bitcoin network without them being able to stop it.

[clock27]

Itll be after the trial at a auction

[Ekaros]

Hmm, what if they were to send those coins to let's say 26 000 000 different addresses Or a decade or two more...