Auction winner relieves US of $19m of seized Silk Road bitcoins (Wired UK)


Somebody just bought a whole heck of a lot of bitcoins.

Last week, the US Marshals’ Service auctioned off 29,656.5
bitcoins it had seized from the Silk Road, the online illicit drug
marketplace the feds shutdown this past autumn, and on Tuesday, the
service said it has moved all those bitcoins — the equivalent of
about $19 million (£11 million) — into the online wallet of the
lucky auction winner. Lynzey Donahue, a spokeswoman for the service
confirmed that the entire stash of seized bitcoins went to a single
bidder, but she wouldn’t say who that was — or how much they paid
for the bitcoins. Speculation in the bitcoin community is that they
went for pretty close to market value. That’s about $640 (£373)
today.

Bitcoin is the world’s most popular digital currency — a new
type of money that can significantly change the way we pay for
things and transfer funds from place to place — and the Marshals’
auction generated a lot of interest. The service sold the bitcoins
in 10 lots of about 3,000 bitcoins each, and Donahue says that
there were a total of 63 bids made by 45 bidders. Bidders put in
their bids on Friday, and they were notified about whether they won
or not on Monday.

The auction caused some anxiety in the bitcoin markets, where a
one-off purchase of several thousand bitcoins could move the price
by more than $100, according to current order books. The big worry
was that someone would snatch up the bitcoins for a song and then
sell them, depressing the market. There are just under 13 billion
bitcoins in circulation, putting the total market cap of the
emerging digital currency at around $8.3 billion (£4.8 billion).
And another auction could be on the way. The feds have also have
second stash of 144,342 bitcoin, seized from Ross Ulbricht, the
Silk Road’s alleged mastermind.

While it’s not clear who bought the Silk Road bitcoins, there
are a few well-funded startups that could use a large stash of the
digital currency. These are startups in the business of helping
people and companies set up bitcoin services that let them store,
send, and receive the digital currency. They need large amounts of
bitcoins so that they can sell them to users-and protect their own
position in the currency, whose value can fluctuate. One of these
companies, Coinbase, says it did not win the auction. A well-funded
Coinbase competitor, Circle, didn’t have a comment on the
auction.

The money may also have gone to individual or institutional
investors who lined up to participate in the auction. The Marshal’s
Service accidentally leaked out a list of the auction’s potential
participants a few weeks back.

This
story originally appeared on Wired.com

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Source: wired.co.uk
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