Interesting!
If those BTC end up selling below the current market price, whoever wins 'em is definitely going to end up richer overnight!
The U.S. Marshals Service is seeking a buyer for 29,656.51306529 Bitcoin it says once “resided on Silk Road servers.” Bitcoin exchange Preev.com says that translates into about $US17.65m at the time of writing. The Marshals' notice about the Bitcoin is framed as a chance to “submit a bid for purchase”. Bids must be …
Do not send your coins to random addresses. That is not a good way to destroy them.
The correct way to destroy bitcoins is to send them with a transaction script that just has OP_RETURN. This type of transaction is provably unspendable, so there's no risk that someone secretly knows the private key and can resurrect them (much) later. This is also kinder to the network because it can be pruned from the "unspent transaction outputs" table.
In theory they could put them in a wallet and deliberately scramble the password I guess. My suspicion is that at least some bitcoins will be shifted around other government agencies for stings/undercover work and the like. If I was a criminal Kingpin, I'd be making my IT peons work on a way to decline any transaction involving a bitcoin that had been in Federal hands.
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I am intrigued by this. In what way will the proceeds be used to "compensate the victims" of Silk Road.
Silk Road was a market, primarily drugs as I understand it. So what victims can they compensate. Sellers who lost business when the authorities moved in? Well no, they're obviously not going to compensate those. Buyers who got what they paid for? Well if you take the view that drugs are harmful and that addiction reduces ones ability to say no to them as the government puports, then these people are victims to your mindset. But again, I can't really see the US government compensating drug buyers for having received their drugs. Which leaves buyers who didn't get what they paid for. These are probably the true victims from my point of view but again, I really can't see the US government going to people who got ripped off when buying drugs and saying 'sorry you didn't get the hash you paid for, here's some money back'.
What have I missed here in terms of "victims" who will be compensated. Or will the money, as I suspect, simply vanish into the labyrinthian accounting bureacracy of US law enforcement?
U.S. Marshals asset forfeiture program is little more than a budget balancing scam - legalised theft - that drives so many of these 'drug busts' that are later thrown out of court.
The victim of this sale hasn't even been tried yet, so how come they are liquefying his assets?
American justice at work. Almost makes you sympathise with with terrorists when you see the US government acting like this.
"...irony in the fact that the U.S. Marshal is selling an asset with demonstrated potential to facilitate crime..."
Why is it ironic? Most LEAs seize items from criminals and then, if they have resale value, auction them off in this way. So fast speedboats that have been used to run drugs into the US, or fast cars used in robberies, etc. are all sold. These have (demonstrably) been used to facilitate crime but nobody seems to think their sale is comment-worthy.
"These are Silk Road coins. ". Exactly. They are equivalent to the briefcase full of cash seized in the near vicinity of two people and a similar briefcase full of drugs. The best possible outcome (still bad) if you are one of those people is to claim you have never seen either case before.
"The coins found in possession of Ross William Ulbricht will be dealt with after trial." Probably, but there are plenty of cases where a person has been acquitted of the alleged crime yet unable to "prove their innocence" sufficiently to get their property back. So the trial will be a mere formality.
Won't a large number of these never have been involved in criminal activity? Don't people deposit bitcoin into personal accounts, then use them (or not) to buy things which are probably (but may not be) illegal. Wouldn't they need to locate and prosecute each individual owner of these one before selling their assets? It's very easy for people to prove ownership in this case by providing their login credentials.
What happens with that many dumped onto a very dodgy marketplace all in a day. Not sure many of the Arthur Dalies there will have that kind of deposit to put a stake into this poker game. So personally I'd be surprised of they sell for anything like the claimed current value, given this market was initially bouyed up by those sufficiently curious to pay a few dollars but mostly lost interest (and probably their wallet passwords as well), and has more recently been bouyed up by botnet operators holding users data to ransom, forcing their victims into the clutches of dodgy exchange operators as an alternative to permanent loss of data.
Just looked at the recent uptick in the BTC/USD exchange rate:
http://bitcoincharts.com/charts/bitstampUSD#rg10ztgSzm1g10zm2g25zv
Currently trading at 556 USD and rising.
If anything, the results of the Fed's auction should generate increased interest in Bitcoin for the following reasons:
1) This is de-facto official recognition of BTC's legitimacy, liquidity and potential value.
2) IMO, even if the BTC cache is immediately dumped by the auction winner (which would be strategically unwiser), the nature of BTCs enforced scarcity model indicates a trend towards relatively quick price recovery, perhaps even a second bounce.
All in all, this is likely to be a good day for Bitcoin and its proponents.
However, only BTC "whales" or largish, institutional investors will be involved in this auction (given that the 200K USD deposit is a real entry barrier for most BTC holders).
A series of smaller auctions would have made far more sense, but the Feds probably want to dump it ASAP to avoid future complications. If it were me, I would announce periodic, smaller auctions, whenever the current exchange rate is high (like now).
However, Gov't-run systems designed for quickly harvesting money from confiscated speedboats and villas are unlikely to be tweaked for crypto-currency's unique subtleties.
I for one, will be watching this event with great interest. I wonder if the identity of the auction's participants becomes public knowledge ? Does anyone know?