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US Marshals Service Silk Road Bitcoin auction process complete

updated 11:15 am EDT, Sat June 28, 2014

Winners of seized property to be notified on Monday

The US Marshals Service has completed its auction of the Bitcoins it seized from the raid and shutdown of alleged online drug marketplace Silk Road. The 12-hour auction consisted of nine blocks of 3,000 bitcoin, and one block of 2,757 bitcoins. At current exchange rates, the auction was valued at $17.7 million dollars.

Silk Road was closed in October last year, with alleged founder Ross William Ulbricht charged with a variety of offenses, including narcotics trafficking conspiracy, computer hacking conspiracy, and money laundering conspiracy. Between February 2011 and July 2013, Silk Road is estimated to have generated more than $1.2 billion in business, leading the site into far darker territory than drug sales.

The FBI accused Ulbricht of participating in a murder-for-hire scheme, offering the Bitcoin equivalent of $150,000 to murder a Silk Road user attempting to extort $500,000 from the site with the threat of exposing other Silk Road users, though this was left off the complaint due to a lack of connecting evidence.

Investment firm Citi Group questioned the wisdom of the auction, and the effect it would have on the currency. In a report it published prior to the auction, analyst Steven Englander said that "the USMS could hire a couple of tech-savvy college kids to dribble its Bitcoin holdings into the market, benefiting from the pseudonymity of Bitcoin transactions. Selling Bitcoin with its somewhat liquid market is not the same as auctioning off a 1998 Chevy with a couple of bullet holes in the driver's door."

The Marshals Service declined to say how many bids, or how many bidders participated in the auction, but an email sent in error to all participants revealed some identities of interested parties prematurely. Bidders were required to provide a registration form, a copy of government-issued photo ID, and a $200,000 deposit by June 26. The USMS was also refusing to accept bids from those "acting on behalf of or in concert with the Silk Road and/or Ross William Ulbricht," Silk Road's owner.

Another 144,336 Bitcoins awaits formal forfeiture, as the government proceeds with its prosecution of Ulbricht. Ulbricht has entered a not guilty plea against the charges, which carry a possibility of 30 years to life in prison. A trial is unlikely to happen this year, with the US government claiming that they have over 10TB of data to claw through before prosecution begins in earnest.

At the tail end of the auction, the price-per-Bitcoin fell to $580. Currently, the price sits at $594, less than 24 hours after the completion of the auction. The low for the calendar year was $360 on April 10, in the wake of several Bitcoin exchange collapses.

By Electronista Staff
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