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US Marshals preparing to dump $27M in Silk Road's seized Bitcoin?

updated 06:16 pm EST, Fri January 17, 2014

Agency said to be mulling auction

The US Marshals Service may soon be tasked with liquidating $26.5 million worth of Bitcoin that was seized last year during the Silk Road takedown. Federal prosecutors in New York recently finalized the forfeiture of 29,655 Bitcoins from the Silk Road servers, while another 144,336 Bitcoins--worth approximately $129 million--awaits formal forfeiture as the government proceeds with its prosecution of alleged Silk Road founder Ross William Ulbricht.

"With today's forfeiture of $28 million worth of Bitcoins from the Silk Road website, a global cyber business designed to broker criminal transactions, we continue our efforts to take the profit out of crime and signal to those who would turn to the dark web for illicit activity that they have chosen the wrong path," Manhattan US Attorney Preet Bharara said in a statement. "These Bitcoins were forfeited not because they are Bitcoins, but because they were, as the court found, the proceeds of crimes."

Many Bitcoin traders have closely watched the unfolding scenario, fearing a drop in Bitcoin value if the government quickly liquidates its Silk Road holdings. One of the most popular Bitcoin exchanges, Mt.Gox, shows a total trading volume of just 9,652 BTC for the day.

The seizure also raises into question the US Marshals' plans for converting the digital currency into US dollars, without the federal government formally recognizing or certifying a Bitcoin exchange. The Department of Homeland Security last year seized $5 million from Mt.Gox over suspicion that the exchange was transmitting money without a license.

A spokeswoman for Preet Bharara suggests the government has yet to finalize a plan to liquidate the Bitcoin, however an auction is viewed as a likely method to avoid using uncertified exchanges, according to a Reuters report.

Ulbricht has yet to file an official plea over the charges, which include money laundering, hacking and drug trafficking.



By Electronista Staff
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