back to article US Marshals seek buyer for Silk Road's Bitcoin

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 …

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Interesting!

If those BTC end up selling below the current market price, whoever wins 'em is definitely going to end up richer overnight!

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Re: Interesting!

Not if the sudden release of a large amount of Bitcoin onto the market causes the price to tip.

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Re: Interesting!

Only if the buyer is an idiot. A smart dude will wait for the market to bounce back, and would sell them little by little instead of dumping all the BTC in a huge dump.

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WTF?

Um, what?

Perhaps I'm missing something fundamental here, but why don't the US authorities simply convert the bitcoins to dollars via the normal route?

GJC

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Re: Um, what?

Maybe because that would be treating the Bitcoins as a legitimate/working currency, which is something other tentacles of the US government don't want to happen?

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Re: Um, what?

Could they destroy them? They do with certain other "assets" that are not legitimate or on the shady side.

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Re: Um, what?

That would help Bitcoin even more.

They could send it to an invalid address and it'd be gone for good if the transaction is mined by Eligius, but because this would mean that there are less bitcoins in circulation, the overall price would rise.

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Re: Um, what?

With ease. Simply delete the wallet file.

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Re: Um, what?

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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Re: Um, what?

Dumping that many coins on an exchange would cause bitcoin to implode and you would never get their current value. Besides which the biggest exchanges operate out of Bulgaria and Slovenia and are barely legitimate themselves.

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Stop

Re: Um, what?

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.

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Re: Um, what?

Sending them to a "random" address as you say doesn't prove much, but sending them to something like 1USGovBitcoinDumpSayNo2DrugsSk3lMp would also be a valid method. Not that I can think of any reason they would really want to do that.

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Doing it wrong.

Selling them all off at once means few people could afford to participate, resulting in them getting a below-optimal price.

A better approach would be to break them into many auctions of maybe a hundred coins each.

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Re: Doing it wrong.

of course they're doing it wrong - the federal government never misses an opportunity to miss an opportunity.

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Re: Doing it wrong.

Getting 80% of their value in one transaction is better than the time wasted administering multiple auctions.

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Childcatcher

Re: Doing it wrong.

Breaking the BC into multiple lots would hardly be a cause for concern in this regard and much more likely to maximize profits. It's not as though there would be much additional overhead in running an online auction for 100 or 1000 sales versus a single transaction.

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Compensate the victims

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?

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Re: Compensate the victims

i think they mean victims of crime in general.

btw, they still have an additional 140K BTC that belonged to dread pirate roberts and which are not yet being auctioned off.

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Coat

Bitcoin drug buying...

Forgive me, but has anyone ever made the obvious joke about using Bitcoin for Silk Road purchases: "Here's my hash, now give me yours."

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I'll get my coat.

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WTF?

Nothing like selling the assets before a conviction

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.

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WTF?

Why is it ironic?

"...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.

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Re: Why is it ironic?

Because there hasn't been a trial yet - but I guess the thinking is that we know what the result is going to be so they might as well sell the BTC now.

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Re: Why is it ironic?

These are Silk Road coins. The coins found in possession of Ross William Ulbricht will be dealt with after trial.

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Re: Why is it ironic?

"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.

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Perhaps I don't understand the process

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.

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"the fact that the U.S. Marshal is selling an asset with demonstrated potential to facilitate crime"

Unlike any other form of currency of course. Nobody pays for illegal things with *that* stuff.

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Anonymous Coward

I'll take them off their hands...

I might even go as high as tuppence ha'penny for them.

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Anonymous Coward

interesting to see

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.

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Anonymous Coward

So... hypothetically you understand... If I'm a "victim" of Silk Road drug dealing, how can I apply for some compensation?

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Anonymous Coward

Quite the opportunity

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?

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Childcatcher

Re: Quite the opportunity

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?

The results of such auctions, including the purchasers, are a matter of public record.

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