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US To Auction 29,656 Bitcoins Seized From Silk Road
ClownP writes with news that the U.S. Marshals Service is selling off 29,656.51306529 Bitcoins that were seized when the Silk Road website was shut down. At current exchange rates, they're worth around $17-18 million. The coins will be auctioned off in nine blocks of 3,000 coins, plus one block with the remainder.
The USMS said that the first deadline for bidders will be 9am Eastern Time on June 16, 2014. All bidders must complete the government's Bidder Registration Form, which requires that you provide a copy of a government-issued ID as well as a $200,000 deposit sent by wire transfer from an American bank. The government added that the highest bidder will win, and he or she cannot finance its payment in installments — the winner must pay the full amount in cash. The USMS added one final stipulation. "The USMS will not sell to any person who is acting on behalf of or in concert with the Silk Road and/or Ross William Ulbricht, and bidders will be required to so certify," the USMS stated.
On the first bitcoin, I bid one bitcoin.
Do they accept payment in Bitcoins?
They're laundering the coins. The high bidders will end up being shell companies for TLAs.
"Lack of speed can be overcome. In the worst case by patience." --Znork
IRS said bitcoin is property
and the auction by the government only legitimizes it further as a real asset worth real money.
Governments deal with foreign currency all the time, but as the other poster says, the IRS have already stated they consider BitCoin to be property rather than currency - and the government auctions property even more frequently than they auction foreign currency.
This isn't any different from them auctioning off any asset seized by law enforcement though.
They're basically treating bitcoins like anything else. It's the same as them auctioning off Beanie Babies or baseball cards. They want to convert things they take into US currency and auctions are how they get what the market will bear from it while doing so quickly.
Since I can't tell them apart, I treat all ACs as the same person.
The government has never been against that, so it doesn't need 'legitimising' in that manner.
It's an auction of property they seized. If the property value is expected to sell for more money than you have, you will not be the highest bidder. This is the way auctions (government and non government) have been for just about ever. This has nothing to do with the rich or poor. There is no incentive to split them into 29,000 individual items either. That would be a waste of time and money.
What's your point?
No, it doesn't, actually, or at least not any more than it somehow makes cars, homes, or other items seized and auctioned off suddenly become money.
What would legitimize it would be if they kept them and used them as money to buy things. They aren't. They're getting rid of them and explicitly NOT treating them like money.
It's literally no different than if they'd seized any other thing that some people think is worth buying.
Since I can't tell them apart, I treat all ACs as the same person.
Using an "exchange" would legitimize it as currency. Auctioning it treats it as property. Imagine the government was auctioning dollar bills seized in a drug raid, or tried trading seized sports cars for dollars on a currency exchange.
Let me blow your mind right now: all currency is fake. That's what makes it currency instead of bartered goods.
Selling off his stuff implies he or Silk Road were found guilty.
Because that's not how the government works in this regard?
They take shit, they auction it off to the highest bidder. The government is not in the business of managing an inventory, they want to convert whatever they take into cash as fast and efficiently as possible.
They think 3000 coin lots is the most efficient way for them to sell them, and couldn't give a shit as to who buys them as long as they pass the vetting process.
Since I can't tell them apart, I treat all ACs as the same person.
If not couldn't they end up 5 years later getting a judge ordering them to return the bitcoins at whatever the going rate is? Does the government routinely sell off shares in companies they seize too?
and what if they lose? little hard to return them
I don't want to get into the "is it money" argument but since this case is still pending isn't it a bit premature to be selling assets of any kind until guilt is proven in a court of law? I guess we've completely trampled on the constitution here especially the fifth amendment.
Harrison's Postulate - "For every action there is an equal and opposite criticism"
I can actually imagine the government being incompetent enough to try auctioning off dollar bills from a drug raid. It makes me laugh, but not quite as much as the thought of idiots bidding ten dollars for that dollar bill.
Could you even pretend surprise when the public purchase of a large block of the coinage placed you on the interesting list with the TLAs?
On the economic side of the equation, wouldn't they keep the price higher if they spread out the block auctions a bit more? That's a lot of coin to dump quickly.... unless taking down the coins value is the intent.
Happiness in intelligent people is the rarest thing I know.
Ernest Hemingway
You're thinking of English auctions. There's also Dutch auctions where the price is lowered from the seller's reserve price and then sealed auctions in which everyone submits a single bid.
"Lack of speed can be overcome. In the worst case by patience." --Znork
It's kind of adorable that you think they don't already know this kind of thing, given the amount of internal snooping they do already.
Also that you think they couldn't tank the value much more easily through other means, if they cared to.
Or that they actually care much about bitcoin beyond "how can we tax it?" type of questions.
They have a thing that they want to turn into cash. They want to do this as quickly as possible, and they don't want to spend time or money trying to take into account the vagaries of all the different kinds of things that they take in order to get maximum value.
Seriously, asking them to try and deal with the details of getting as much as possible from bitcoin would be like asking them to restore classic cars they seize and then try and sell them at various shows or through private channels to get the maximum return. Sure, they could squeeze a few extra bucks out of it, but who gives a shit?
Since I can't tell them apart, I treat all ACs as the same person.
We'll see...
SJWs are the new boogeyman. -Me
So is a collection of national geographic magazines.
That doesnt make it currency.
You're very confused.
Being able to pay for something with legal tender (US dollars) does not somehow make the things you buy with legal tender into legal tender itself. Nor does it somehow turn it into a currency. It sets no precedent.
Selling bitcoin - or ANYTHING ELSE - at an auction in exchange for US dollars does not set ANY kind of precedent establishing that bitcoin - or ANYTHING ELSE - is now legal tender. In fact, it establishes the opposite.
What WOULD set a precedent is if the government called up some suppliers and gave them bitcoin directly in exchange for things that aren't legal tender, because then they would be saying that bitcoin is the same as US dollars.
What they are doing here is saying "we have these bitcoins (and other things) and we would rather have US dollars, which are legal tender. We will give you these bitcoins for dollars, which we will then go and use like real money."
This isn't difficult.
Since I can't tell them apart, I treat all ACs as the same person.
It's an auction. The great thing about an auction is it sets a data point for market value in the fact that people are paying for something in a competitive manner.
The size of the deposit does set a minimum expectation of the value of a block, although I've made deposits (much smaller ones) on auction items that went for less than the deposit. That's not common, but in the case that it happens the balance of the deposit is just returned to the buyer.
And sorry, I didn't mean to be condescending there by saying adorable - I was more trying to shit on the snooping the US government does on random, inconsequential shit.
Since I can't tell them apart, I treat all ACs as the same person.
If the feds "sieze" your bitcoins, but you have a backup copy of your wallet, what's to stop you spending them (ignoring any legal issues)?
Good day,
With warm heart I offer my friendship, and my greetings,and I hope this letter meets you in good time.
It will be surprising for you to receive this proposal from me since you do not know me personally.
However, I am sincerely seeking your confidence in this transaction,which I, propose with my free mind and as a person of integrity.
This should normally not be a requirement, but when you understand the transaction then you will understand why it is important that you live far away from me.
The amount of money involved in this transaction is $17-18 Million in bitcoins which is too much for a man of modest means like myself to handle in my country.
I hereby ask for you to send an application to the the U.S. Marshals Service to get this fund transfered into your bank a/c.
All I need is for you to follow my instructions closely because I am experienced in matters here and i am on ground here to advice you on every step until you receive the money. Please provide a copy of a government-issued ID as well as a $200,000 deposit sent by wire transfer from an American bank.
I also indulge you not to make undo use of the information given to you, I need also to trust that you will not tell people or your bank about this business.
Yours truly,
Mr Thomos Dah
NB:Please contact me via my private email above.
and the auction by the government only legitimizes it further as a real asset worth being taxed.
FTFY. And now you know their motivation.
An enigma, wrapped in a riddle, shrouded in bacon and cheese
I dunno how meaningful it will be as a data point:
- You have a seller who (probably) doesn't give 2 shits about what happens to the value of what they are selling once the sale is complete dumping the things as fast as they can.
- It's a one-off transaction selling the things in bulk, through a process that is unique/doesn't follow the regularly used methods for bitcoin selling.
- It's getting a lot of attention because.
One way or another, whatever they get sold at, this bit of data isn't really too meaningful, except, maybe as just being kind of interesting to nerds.
Since I can't tell them apart, I treat all ACs as the same person.
There is just too much information out there in to be sifted through, so unless you behave in a manner that arouses their interest, you can still fly under the radar.
And I can live with condescending. It's practically the price of admission to speak with a lot of smart people. Just don't ever renege on "adorable" again.
Happiness in intelligent people is the rarest thing I know.
Ernest Hemingway
So when is the government auctioning off $100 bill or T-Bills?
and the auction by the government only legitimizes it further as a real asset worth real money.
Only if they actually get some bids. I'd love to see a scenario where only one bidder shows up and (despite the $200k honest money requirement) bids 50cents.
Oblig: why doesn't the USgovt put it on eBay with a BIN of $Xmillion?
https://app.box.com/WitthoftResume Code: https://github.com/cellocgw
Okay - I take it back, and you will forevermore be considered "adorbs."
With regards to they (in this case law enforcement agencies involved in busting Silk Road) knowing everything:
I think as part of their investigation and bust of Silk Road, they almost certainly became aware of the identities of multiple people who are both interested and able and willing to buy the bitcoins at auction. I'm also willing to bet, given the strong libertarian/fuck the federal government bent of many people participating in bitcoin, they probably at least sent a memo to other agencies not involved in the Silk Road case directly.
The converse of this is that anyone who participates in this auction AND who cares about the privacy/anonymity aspects of bitcoin would have to be catastrophically stupid and pettily greedy. Not an uncommon combination, unfortunately, but they probably weren't flying under the radar to begin with, you know?
Basically this is just going to be a chance - maybe - for someone who already has money to make a few more bucks; the privacy/anonymity angle is interesting, but it doesn't seem like anything with teeth, I guess.
Since I can't tell them apart, I treat all ACs as the same person.
You're right. It would make bitcoin legal tender only if you could pay for the auctioned bitcoins with... bitcoins. But then again, that would be pretty pointless, wouldn't it?
cpghost at Cordula's Web.
You can transfer it to other addresses. Just because it's known that I own address A, doesn't mean it's known that I own address B. A transaction can be proved to have transferred from address A to address B, and that B now owns it, but there is no way to prove that the owner of address A also owns address B *without* gaining access to the local wallet file that contains the keys. This is how "offline" storage works. You generate a new address on a machine that never sees a network connection. The coins are still "stored" on the network, and anyone can see where they are, but nobody has access to the private key to sign it over to a new address without having physical access to the machine with the private key (or copies that have been made).
So yes, it can still be anonymous. You take the 3000 BTC as a known and identified user. You immediately transfer these coins to a bunch of other random addresses that you create. For all anyone else knows, you sold them to some guy on the street, some guy on ebay, some guy on craigslist, your brother Phil for that pizza. Prove I own that address? You would need my private keys to do that, and there's nothing preventing me from destroying the private keys as I empty the accounts. I have a coworker that pays me for lunch in BTC all the time. He only assumes that's my address he's sending money to. It could be my Grandmother in Switzerland, or a charity or open source project I'm fond of. He has no way of really knowing that without catching me with my private key.
If the government sold US dollars for bitcoin, I would say that sets a precedent that they are treating bitcoin like legal tender. A weak precedent, since the argument could be made that they "sell" US dollars for fighter jets, and yet fighter jets are not legal tender.
If the government accepted bitcoin for other things they offer, I would say that sets a precedent that they are treating bitcoins like legal tender. That would be a much stronger precedent.
If the government purchased things with bitcoin directly - as in used it to settle debts - then that would be the strongest possible precedent (short of them flat out saying "bitcoin is now legal tender") that they are treating bitcoin as legal tender.
The government is not treating bitcoins like they treat legal tender, not in any way, shape or form. I know you're probably just being silly with the "buy bitcoin with bitcoin" line, but there are - as I pointed out above - ways that you could establish a precedent that don't involve sophistry.
Since I can't tell them apart, I treat all ACs as the same person.
If it did as opposed to going to a standard exchange this would make sense. If it would normally just change them for Dollars at a bank at a KNOWN RATE then this Bitcoin auction makes no sense. The government may get only 50% of the value or less of these Bitcoins by doing it this way when a known US company such as Bitpay or Coinbase could do it for them at a pre-arranged rate.
"Why do you rob banks?"
"Because that's where the money is."
He never knew about the US government's War on Drugs (TM). FedGov's peers would term it a 'good earner'.
kinda makes you wonder why they are selling them at this point in time, and whether they know about something that is soon going to affec tthe price of bitcoins (beyond their own big auction).
Which means they aren't money themselves. Good to know.
To all those complaining about the minimum bid... I think that's fair. If they had a yacht, you would expect a minimum bid. If it was a piece of land, you'd expect a minimum bid. If it's some crypto currency worth 1.7mil.... You should expect a minimum bid.
They could still do 29 lots of 1000, instead of 9 lots of 3000
They just don't want the public to have bitcoins.
If you destroyed the keys (and they were the only copy) wouldn't you be effectively destroying the bitcoins as well (since they can never again be spent)?
Then there is the reverse Dutch auction, people put in their bids, the auctioneer figures out the price to clear the market, and everybody who bid above that price pays that price. It works best when you have many lots that are basically the same. I would hope they would use this method – but then again I would hope that there would be more and smaller lots.
Google use this method when the IPOed their stock. Unlike other dot coms where the price pops after a IPO (implying they left money on the table), Google's price initially slumped (which implies that they did not.)
> They just don't want the public to have bitcoins.
It's a bit too late for that, given that there are 3.2 million online bitcoin wallets between just the two largest services (Coinbase.com and Blockchain.info), and about 150,000 unique bitcoin addresses are used daily ( https://blockchain.info/charts... ) Addresses are not equal to users, they hold some number of bitcoins each. Wallets hold the private keys that control addresses, and you can have multiples, but the point is lots of people already have access, and it's moving around a fair amount.
> The government is not in the business of managing an inventory,
Tell that to the Bureau of Land Management, or the General Services Administration.
Let me blow your mind right now: all currency is fake. That's what makes it currency instead of bartered goods.
This. Times a million
Every currency (Yes, Virginia, even gold-standard currencies) are completely fake and arbitrary. The difference between fake and arbitrary fiat currency and fake and arbitrary gold-standard currency is exactly one layer of abstraction, because the "value" of gold is in itself pretty arbitrary. It is somewhat rare, but it's "value" is completely generated by the human mind. Which is actually for the best--can you imagine how high the price of gold would be if it was actually useful for something besides making jewelry and helping Fox News scam old people out of their savings with terrible gold investment opportunities?
Humans assigned "value" to gold because it was rare-enough to avoid hyper-inflation, but common enough that you didn't have to worry about deflation. And that worked just fine for a few tens of thousands of years... until there were too many humans for the world supply of gold to adequately represent new wealth and value as they're created.
If a more numerous race of aliens had evolved on this planet they might have assigned value to blades of grass, pebbles, or certain kinds of trees in a similar matter based on their own needs.
Which is why the entire "gold standard" argument (that "our money is fake and worthless") is so stupid: Yes, it is fake and worthless. So is all other money, everywhere--the value comes from the perception. So it doesn't matter if its "backed by gold" or "backed by Jell-O Pudding pops" the fact is, the value is based totally on the perception of value of something. With fiat currency, it's the perception of the value of what you can buy, with "gold-standard" currency it's the perception of the value of the gold. But neither has any "real" value without that perception.
Who did what now?
Then why are they trying so hard to make sure that only the wealthiest of the wealthy have any hope of winning even a single bitcoin from this auction?
It's not like a house or car or something that can't be subdivided and must be sold as a single item. They could break this auction into any number of smaller lots, but they intentionally chose to break it into as few as possible, in order to artificially raise the barrier to entry so that only those people with a spare $2 million in cash are allowed to bid.
If the things are to actually be thought of as currency, then they should be considered fungible. If they are fungible then any price paid for a large quantity of them should impact the value of the market in them and at the same time be informed by the market in them.
I have not followed this topic very closely, but I think this is a sufficiently specific question with a sufficiently complicated answer to be worth asking: because people have to make large purchases I'm sure there's names involved, so will these transactions de-anonymize Bitcoin to a great extent? I understand agencies can already track specific blockchains if they really feel the need, but I wonder if this will make it much easier.
The real distinction of legal tender, I.M.O., is when you don't have to pay taxes on transactions or capital gains. That's why one could argue that capital gains tax on gold is unconstitutional, because it undermines it's distinction as legal tender. "No State shall ... make any Thing but gold and silver Coin a Tender in Payment of Debts..."
What is it called when someone's property is taken by force?
What do you call the one who takes what does not rightfully belong to them?
Now the stolen goods are up for sale. Are there laws against receiving stolen property?
The truth shall set you free!
That's actually not a Dutch auction. Basically, English, Dutch, and sealed are the three methods of conducting the auction while you can have variances thereof. An English auction works by having the auctioneer start at the reserve price and asks bidding to go up. In a Dutch auction the auctioneer starts at the reserve prices and lowers until a participant accepts. Sealed auctions require participants to all submit their bids silently and they're only permitted to submit a single bid.
What you described is a uniform price auction. Multiple identical items. Each person submits a bid of how many he will buy and at what price. The highest bidder gets his allotment and it progresses downward. Then everyone pays the lowest price that received goods.
"Lack of speed can be overcome. In the worst case by patience." --Znork
One of the things things the helped in the Nevada ranch stand off is that no dealers would buy the cows because no rancher would ever sell them a cow again. If a few major exchanges say that anything tracing back to the Gov wallet can not be accepted, then what the Gov seizes will loose its value.
Because they do not care and they shouldn't. They want rid of them in the easiest and least time and administrative consuming method possible. This is how ALL auctions are done. The auction should start and finish in a few hours. If there is a market for them and they can sell 3000 at a time, they will sell them. If not, they will break them up and try again. Is that really hard to understand? Different government agencies have probably thousands of auctions a year, this process and method of quickness and get rid of it is nothing new.
Separate yourself from your delusional attachment to everything bitcoin and think outside the box. If bitcion ever does become a common form of currency and not just a bunch of geeks loathing and speculating over the concept, it will be treated just like.... Every other form of currency that has ever existed. Your days in the shadows talking about freedom and the ideology behind it and your part in the system and fiat this and that will be long forgotten. No world problems will be solved by any form of crypto currency.
When the Feds bust a normal street-corner drug dealer, they get "legal" property, such as cars, and illegal property such as their inventory of drugs. The illegal property is retained as evidence until the court case is concluded, then destroyed. The legal property gets sold off.
The Silk Road bust is subject to the same laws as any other drug-dealer bust, so by auctioning off the bitcoins, they are declaring that they are legal property.
Legal tender means that it must be accepted as settlement of debt. The IRS will in practice accept checks and bank transfers as settlement of tax liabilities, but that does not make them legal tender.
For non-identical items, it can get ever weirder. For example:
Be a bidder on 10 poker tables seized from an underground casino.
Winner bids $230 and gets first pick. He's then allowed to take any more he wants at $230. Then the second highest bidder can have one at $220 if he still wants one, and so on, until they're all gone.
Correct.
If you have BTC, and you lose your wallet and/or keys to your wallet, those bitcoins are (effectively) destroyed.
If the US government seized Euros or Yen or Pesos or whatever, they would just convert them to USD through foreign exchange. Why aren't they simply converting these Bitcoins through a Bitcoin exchange into USD and getting their money that way?
Trading one thing for another is legal, even if neither thing is money, and even if it's a commercial transaction. I know of a case in which some advertising was paid for with boat covers for the agency owners (my wife was doing the accounting there, and had to find out how to enter it). All the government cares about is picking up the proper amount of taxes.
"When you have eliminated the unacceptable, whatever is left, however improbable, must be the truthiness" - Holmes
Logic fail. The Constitution permits states to make gold into legal tender. That doesn't mean gold is inherently legal tender. BTW, what transactions and capital gains are you talking about? I have to pay taxes on my interest income, and since there's only one legal tender in the US it can't be bought and sold.
The real distinctions between dollars and bitcoins: (1) The government requires dollars in payment of taxes and fees. (2) The government requires accounting in dollars, so as to calculate taxes. (3) Courts will normally award dollars as damages in civil cases.
"When you have eliminated the unacceptable, whatever is left, however improbable, must be the truthiness" - Holmes
I've bought various things from a government auctions before. Back in the mid 90's I has highest bidder on a single lot of computer stuff. It was roughly 200 CRT monitors, 30 LJ printers, 50 desktops, random KB and mice. I think it was around $6K. I had 12 hours to get all of the equipment off site. Why didn't they separate out the different components into different lots? Why didn't they sell 20 lots of 10 monitors separately? Wouldn't that have been more fair? Who has the storage space for all of that and can get it off site in 12 hours? Who knows and they do not care. That is the way they do it. They are not in the retail, storage, or resale business, they want rid of it and they get rid of it the easiest way there is with as few transactions as possible.
"but it's "value" is completely generated by the human mind"
All value is all in the mind. A juicy BigMac can be way more valuable than gold or diamonds to a starving man. Now if there's anything that's naturally valuable it's the biological necessities like oxygen (free for almost everybody except those with severe breathing problems), water, food, and possibly sex to person (man?) of breeding age. Everything else is an acquired taste.
Would a wheat based currency system be as you say "fake and worthless"?
Maybe not, but the fact that wheat is useful as a foodstuff makes it extremely unlikely to be chosen as currency, or to "back currency."
Who did what now?
I can actually imagine the government being incompetent enough to try auctioning off dollar bills from a drug raid. It makes me laugh, but not quite as much as the thought of idiots bidding ten dollars for that dollar bill.
Maybe they think that dollar bill had soaked up $10 worth of cocaine or whatever from being stashed with the drugs.
I heard several years ago that there are basically no one hundred dollar bills in circulation for any length of time that do not have traces of cocaine.
I see even classic Slashdot is now pretty much unusable on dial up anymore.
Doesn't this mean that the goverment officially approves of bitcoins ? I mean, if this was a drug bust they'd destroy the drugs. By selling them they're pretty much guaranteeing that if they ever move to make them illegal or undermine them in the US, this sale will come up as a precedent of Bitcoins being legally legit.