What's next? Procedure for seized BTC funds from Silk Road

[Spekulatius]

Looks like the whole thing go more interesting today :
http://www.forbes.com/sites/andygreenberg/2013/10/25/fbi-says-its-seized-20-million-in-bitcoins-from-ross-ulbricht-alleged-owner-of-silk-road/

[User705]

Here's an interesting thought.  Can the people who lost BTC with pirateat40 trace their coins and petition for their return from the FBI stash as recovered stolen property?

[Hfleer]

I would like to see an auction also.  Let me get some of those coins for cheap.

[NewLiberty]

I would like to see an auction also.  Let me get some of those coins for cheap.

We may see bitcoin price depressions near the end of the trials when expectations of selling these rise.  The sale will likely be forfeiture auction.

It would be interesting if there were a pool created to bid on them, the pool sells shares in the pool to raise the bidding fund.  Big buyers are waiting, not buying on exchanges because of expected sales, many/most of the forfeiture auction bidders joined the pool.  Others sold bitcoin to join the pool depressing the bitcoin price further, the pool buys the forfeiture against a thin bidding market at a low price in an artificially depressed period due to the effects of the sale.

[darkmule]

It would be interesting if there were a pool created to bid on them, the pool sells shares in the pool to raise the bidding fund.  Big buyers are waiting, not buying on exchanges because of expected sales, many/most of the forfeiture auction bidders joined the pool.  Others sold bitcoin to join the pool depressing the bitcoin price further, the pool buys the forfeiture against a thin bidding market at a low price in an artificially depressed period due to the effects of the sale.

This would actually be a good idea.  First, it would probably ultimately be profitable to whoever places the winning bid, even if uncertainty about what will happen with the BTC might depress prices in the short term.  Second, it would help protect BTC against the possible impact of some rapacious bandit simply lowballing it for 10% or under and then dumping it, simply by forcing the selling price somewhat closer to true value.

[row5_seat47]

<SNIP>
* An interesting alternative could be to simply auction off the Bitcoin to the highest bidder (likely a pool  created for the purspose of purchasing)
http://www.treasury.gov/services/Pages/auctions_index.aspx
dunno... this could be crazy talk.

yup

[NewLiberty]

It would be interesting if there were a pool created to bid on them, the pool sells shares in the pool to raise the bidding fund.  Big buyers are waiting, not buying on exchanges because of expected sales, many/most of the forfeiture auction bidders joined the pool.  Others sold bitcoin to join the pool depressing the bitcoin price further, the pool buys the forfeiture against a thin bidding market at a low price in an artificially depressed period due to the effects of the sale.

This would actually be a good idea.  First, it would probably ultimately be profitable to whoever places the winning bid, even if uncertainty about what will happen with the BTC might depress prices in the short term.  Second, it would help protect BTC against the possible impact of some rapacious bandit simply lowballing it for 10% or under and then dumping it, simply by forcing the selling price somewhat closer to true value.

If this were a movie script, they might cast the the mining pools as the groups that diversify into this arena.  They have most of the security and structure and constituency to accomplish it, and their current model is failing, and they might be able to handle these US legal issues more simply.

[User705]

But who would want to bid for them.  Any thoughts of privacy would be gone since the bidder would fully identify themselves to the FBI.  Only some sort of arbitrage but that means selling them right after buying them.

[darkmule]

But who would want to bid for them.  Any thoughts of privacy would be gone since the bidder would fully identify themselves to the FBI.  Only some sort of arbitrage but that means selling them right after buying them.

The FBI is as capable of looking at the blockchain as anyone else.  Why would it be any worse with Bitcoin than with buying any other seized asset?

[User705]

But who would want to bid for them.  Any thoughts of privacy would be gone since the bidder would fully identify themselves to the FBI.  Only some sort of arbitrage but that means selling them right after buying them.

The FBI is as capable of looking at the blockchain as anyone else.  Why would it be any worse with Bitcoin than with buying any other seized asset?

Seeing the blockchain tells you nothing regarding people behind the addresses but if you were to buy coins from FBI at this auction you'd have to identify yourself.

[darkmule]

Seeing the blockchain tells you nothing regarding people behind the addresses but if you were to buy coins from FBI at this auction you'd have to identify yourself.

So what you're saying is that buying Bitcoin at a government auction is like buying anything else at a government auction.  Okay.  And?  If that's a concern for you, you wouldn't be buying something at a government auction in the first place, Bitcoin or anything else.

[bassjoe]

If the feds DO sell it (a big if), they won't go to an exchange. They'll sell it in an auction like every other asset they seize. We may know the price but since it's essentially a private sale, it won't impact the day-to-day prices of bitcoin; also, it may be months before anybody is able to figure out the price it was sold for.

[bassjoe]

But who would want to bid for them.  Any thoughts of privacy would be gone since the bidder would fully identify themselves to the FBI.  Only some sort of arbitrage but that means selling them right after buying them.

It's cute that you think you'll be able to buy/sell XBT in any substantial amount without disclosing huge amounts of information about yourself.

[Cryddit]

Hell, I don't care.  I'll go right ahead and disclose information about myself to the FBI.

And, It's nothing they don't know already.  We went over all of this in great boring detail when I got my clearance as a security contractor.  They know exactly who I am.  So does the NSA for that matter.  The Treasury department would be new to me, but not terribly unexpected given some of my specialties.

So, yah, full disclosure.  I'm not a fed, but I do work semi-closely with some subsets of feds. It's even possible that via one of the security contracts I might get called as an expert witness in a Bitcoin case.

Only problem is, I doubt that I'd be able to scrape up enough money at one time to make any significant purchase.  Hmm, well, there is this one job that might make me US$10K by the end of the year, but it's a bit of a long shot. Still, that's not a very big drop in a $20M (or possibly $60M) bucket.

[User705]

But who would want to bid for them.  Any thoughts of privacy would be gone since the bidder would fully identify themselves to the FBI.  Only some sort of arbitrage but that means selling them right after buying them.

It's cute that you think you'll be able to buy/sell XBT in any substantial amount without disclosing huge amounts of information about yourself.

If it's not possible to stay even remotely anonymous that takes out one of the major benefits of bitcoin.  Bitcoin needs to retain that aspect if it is going to even remotely challenge gold or silver as a method of anonymous savings.  Coinjoin would do wonders in that regard.  I'm also fairly certain it is possible to buy/sell large amounts just not all at once.