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Winners of First Seized Silk Road Bitcoin Auction Remain Anonymous

Posted by ryuzaki0 on from the wait-until-they're-blacklisted dept.

ASDFnz (472824) writes with news that the first block of bitcoins seized from the Silk Road have been auctioned off, and for a pretty high price. The winners are unknown, and Bitcoin has bumped from trading at ~$600 to $650 (USD). From the article: ...In the absence of information speculation both on the markets and on the Internet is building. First Barry Silbert, Founder of SecondMarket and BitcoinTrust has tweeted that they were outbid on all blocks. Since then Alex Walters (a former core Bitcoin developer and the then chief technology officer of Bitinstant) has posted on reddit saying 'I Lost' in his $400 to $500 per coin. That post was closely followed by another reddit user saying that his bid of $451.13 per coin was also unsuccessful. ... Meanwhile the actual price of bitcoins of the various exchanges has risen close to 15% from just under $600 a coin to close to $650. In the end, we may never know who bought the confiscated coins or how much they bought them for but it does seem that it will be a pivotal point in Bitcoin's evolution.

14 of 88 comments (clear)

  1. One stupid question by StripedCow · · Score: 2

    Why didn't they just sell these bitcoins at a regular exchange?

    --
    If Pandora's box is destined to be opened, *I* want to be the one to open it.
    1. Re:One stupid question by roninmagus · · Score: 4, Informative

      How do they choose the exchange? Government property must be auctioned off to the highest bidder, otherwise they are favoring a business over others.

      One of those little things that they do to maintain the appearance that they are not corrupt.

    2. Re:One stupid question by FireFury03 · · Score: 3, Interesting

      How do they choose the exchange? Government property must be auctioned off to the highest bidder, otherwise they are favoring a business over others.

      One of those little things that they do to maintain the appearance that they are not corrupt.

      I'm curious how they handle foreign currency which is seized - if they seize a truck full of euros, do they auction them or of just exchange them for dollars? If the latter, what's the difference between that and doing the same with bitcoins?

      --
      http://blog.nexusuk.org
    3. Re:One stupid question by nitehawk214 · · Score: 3, Insightful

      The buyers of these auctions probably are exchanges. The exchanges themselves do not want them all dumped into the market at once to prevent the prices from crashing.

      I would say this arrangement benefits the buyers, exchanges and the government at once. It has the added benefit of appearing to not trying to manipulate coin prices too much.

      --
      I'm a good cook. I'm a fantastic eater. - Steven Brust
    4. Re:One stupid question by risom · · Score: 4, Insightful

      The difference is liquidity. Bitcoins market depth is tiny. A truck full of Euros (about the same market value as the bitcoins) sold at market rate wouldn't be noticable on the charts. 30k of bitcoins sold at market rate would absolutely crush the market.

    5. Re:One stupid question by itzly · · Score: 2

      Why would exchanges care about the price crashing ? The more the price swings, the higher the trade volume, and the higher the profit for the exchanges.

    6. Re:One stupid question by alexander_686 · · Score: 2

      Except that most exchanges are "long" on bit coins. That is they have a inventory of bit coins. If the market crashes so does the value of inventory. Some volatility encourages trading but they are still interested in the long term health and stability of BitCoins. Wild swings tends to shut the markets down.

  2. How Can The USMS Sell These? by Anonymous Coward · · Score: 2, Insightful

    Please excuse my ignorance, but I'm curious under what authority the USMS can sell off these coins? Their web site indicate that these coins belonged to "Silk Road" but not to Ross Ulbricht. As far as I know, there was no "Silk Road, Inc." so wouldn't the coins technically belong to Ulbricht or whoever owned / leased the seized servers? Without any kind of corporation Ulbricht would be, in essence, the "sole proprietor" of Silk Road. And if that's the case, how can the marshalls sell off his property without a conviction? It seems like selling his property now is a violation of due process. But then... IANAL.

    1. Re:How Can The USMS Sell These? by SuricouRaven · · Score: 2

      It's fairly common practice when drugs are concerned - I'm not really knowledgeable on the legal theory, but they are essentially 'convicting the property.' They can prove that the coins are proceeds of crime, even if they can't prove ownership, which is good enough to seize them.

    2. Re:How Can The USMS Sell These? by will_die · · Score: 2

      It was agreed that Ulbriht is the only person who has a possible right to the bitcoins so he and USMS agreed that because of the volatility of the Bitcoin markets that the USMS would have the right to sell the coins as they want and then the monies from that sale would go into a deposit fund until the court case has been decided upon.
      So the coins were not seized, just sold off and the value, at the time of sale, is now waiting a court decision.

  3. Re:And what about the innocents? by fuzzyfuzzyfungus · · Score: 2

    There was at least one seller on silk road shipping only legal stuff like glassware. Did he get his coins returned?

    Not to worry, he is free to make himself known to us and fight a legal battle that will cost more than the coins were worth. We will then classify his wares into 'crack pipes', 'bongs (for the mexican loco-weed)' and 'miscellaneous, probably for meth cooks' and charge him accordingly.

    And he had better not have shipped any to Texas without a suitable license...

  4. Re:Value by codebonobo · · Score: 4, Interesting

    If bitcoin was trading at something like $600 beforehand, why would anyone bidding $450 be surprised that they lost out? If these bitcoin boosters are so firm in their belief that bitcoin is as fungible as any other currency, shouldn't they have bid at something like the going rate?

    This was a test in the fungibility of Bitcoin. Some investors underbid in hopes that the hurdle of a minimum of 200,000usd deposit would lower competition and the demand would not be so fierce to be able to purchase 30,000 extra bitcoins in a single day.

    What this auctioned has shown is that the market can easily take large amounts of bitcoin being liquidated and demand s so high that over 20 million dollars in investor money was brushed aside where they will have to turn to exchanges to satisfy their investments.

  5. No exchange at all by JcMorin · · Score: 3, Insightful

    Since it's a big volume, picking one particular exchange would disturb the price of Bitcoin temporarily. That's why they decided to auction them instead. They could have sold it to the market, but to be wise the would should to sell like 10 BTC per hours unless they willing to go into [bigger] Chinese exchanges... The beauty of bitcoin is that you don't need clearing house, exchange or bank. You can trade them directly.

  6. Re:Pivotal point? by codebonobo · · Score: 2

    Why? This has nothing to do with the technology itself, nor regulation or adoption of that technology, nor has the price been pushed up to anything beyond what it has been before. The government seized some assets, and then auctioned them off.

    Many people feared that the market and demand for Bitcoin could not satisfy 30,000 or ~18 million dollars worth of coins being liquidated within a single day. Instead this auction proved both liquidity, fungibility and that their are many institutional investors sitting on the sidelines waiting to invest in Bitcoin but are looking for opportunities like these in order to invest in large sums of bitcoins.