Friday, January 17, 2014

BREAKING: The Feds Are Ready To Sell $25 Million of Bitcoin Seized From The Silk Road

Kashmir Hill at Forbes reports:
One of the bigger wallets on the Bitcoin blockchain is going to be emptied in the near future. Back in October, when the feds took down the online drug bazaar Silk Road, they seized the nearly 30,000 bitcoins in its coffers. On Thursday, the Manhattan U.S. Attorney’s office, which is prosecuting the Silk Road case, announced that a judge had signed off on a forfeiture order for those coins. That means they’re now free to get rid of the 29,655 bitcoins, worth about $25 million at Bitcoin’s current $850 value.

“We have not yet determined exactly how the Bitcoins will be converted and liquidated,” said Manhattan U.S. Attorney Office spokesperson Jim Margolin.

There is no legally certified U.S. Bitcoin exchange, and I doubt the feds want to sell the coins via Mt. Gox, which got in legal trouble last year for operating in the U.S. without a license, or via BTC-e, the mysterious exchange based in Bulgaria. It’s likely that the U.S. Marshals will instead auction off the Bitcoins as if they were Bernie Madoff’s penthouse or a drug dealer’s cars. When the FBI first seized the coins in October, they were worth about $6 million; they’re now worth four times that. This is a bust that keeps on paying off. The proceeds will go to the U.S. Treasury.[...]

“Ulbricht has filed a claim in the civil forfeiture action, asserting that he is the owner of the Bitcoins found on his computer hardware, and contesting the forfeiture of those Bitcoins,” notes the Manhattan U.S. Attorney’s press release. Ulbricht is facing drug, computer hacking and money laundering conspiracy charges; he claims that he is not the creator of the Silk Road, but that the over $100 million worth of Bitcoin found on his computer does belong to him.

Manhattan U.S. Attorney Preet Bharara made clear in the release that the Bitcoin themselves are totally above board, legally speaking. “These Bitcoins were forfeited not because they are Bitcoins, but because they were, as the court found, the proceeds of crimes,” he says in the release. Any Silk Road users who had legitimate holdings on the site are out of luck. All Silk Road assets are forfeited because they were “being used to facilitate money laundering,” per the order from U.S. District Judge J. Paul Oetken

Spokesperson Jim Margolin could not say exactly when the Bitcoin would go up for sale, but the approximately $25 million worth of Bitcoin will be auctioned off soon. This should be interesting.


  1. Honey Badger, get your wallet ready.

  2. So no one has been convicted yet, but they're already selling the BTC?

    1. You don't even have to be charged with a crime to be the victim of civil asset forfeiture. As the late Harry Browne used to say, "Your innocence is of no protection."

    2. Welcome to the United States of Asset Forfeiture.

  3. So who is going to buy Bitcoins from government? Do they think they will remain anonymous?

    lol...this is truly a fascinating development. The reminds me of going to the race track. I'm just not interesting in playing at the race track with my savings.

  4. So, how do you think the "assets" will be sold? USG opens an account on MtGox?

    The assets will be broken into lots and auctioned off. How much will be paid for these Bitcoins? My gues is something close to market value. What will happen then? Sure, some will likely hit the exchanges for instant profit, others will be held.

    My prediction is this sale will be nothing more than a blip on the overall trend.

  5. I'm ready to buy as much as I can but I'm afraid they'll give Goldman Sachs and JP Morgan first dibs...

  6. "The Feds Are Ready To Sell $25 Million of Bitcoin Seized From The Silk Road"

    Translation: The thieves are fencing the loot...

    Just the government twist on an old theme. Turn Robin Hood into Hood n Rob - steal from the poor and give to the rich...