US auctions 30,000 bitcoins from raid

NATE RAYMOND
Last updated 11:41 30/06/2014
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CACHE: Thirty-thousand bitcoins valued at US$17.7 million seized during a raid on Silk Road auctioned off by US Marshals Service.

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The US Marshals Service has auctioned off about 30,000 bitcoins seized during a raid on Silk Road, an internet black-market bazaar where authorities say illegal drugs and other goods could be bought.

An online auction took place over a 12-hour period on Friday for the bitcoins, valued at nearly US$17.7 million (NZ$20 million). It consisted of nine blocks of 3000 bitcoins and one block of 2657 bitcoins. The Marshals Service has said it would notify the winning bidders on Monday.

A spokeswoman for the Marshals Service declined to say how many bids the office received. Among those who said they registered to participate in the auctions were SecondMarket and Bitcoin Shop.

Silk Road was shutdown after an FBI raid in September 2013 as agents took control of its server and arrested a Texas man, Ross Ulbricht, that the authorities said owned and operated the website.

The auction was for 29,655 bitcoins contained in files residing on its servers, which were forfeited in January.

Chris DeMuth, a partner at Rangeley Capital who had been considering bidding, said last week the chance the Marshals Service gets the market price for the bitcoins is low.

"Anyone could pay market prices on existing exchanges," he said. "So the key question is how much of a discount do bidders want."

The Marshals are holding about 144,342 additional bitcoins found on computer hardware belonging to Ulbricht that were subject to a civil forfeiture proceeding.

Ulbricht, 30, is scheduled to face trial November 3. He has pleaded not guilty to the four counts against him, including money laundering conspiracy and engaging in a continuing criminal enterprise.

US authorities have separately charged three men - Andrew Jones, Gary Davis and Peter Nash - in connection with their alleged roles in assisting Ulbricht in operating Silk Road.

Bitcoin prices were up 3.1 per cent Friday at US$597.41 per coin, according to the digital currency exchange CoinDesk. 

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- Reuters

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