Silk Road Bitcoin Worth $18 Million Get Auctioned Off

Posted: Jun 13 2014, 7:03am CDT | by , Updated: Jun 13 2014, 7:05am CDT, in News | Latest Business News

 

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Silk Road Bitcoin Worth $18 Million Get Auctioned Off
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Last fall, the FBI took down the world’s biggest online drug bazaar Silk Road, and arrested the man it alleged to be its kingpin, Ross Ulbricht, 30. The feds seized the site’s assets and Ulbricht’s which were primarily the currency of choice for anonymous purchases: Bitcoin. A whole lot of Bitcoin: 144,000 from Ulbricht and 30,000 from Silk Road coffers, worth over $100 million at Bitcoin’s current $600 valuation. Nine months later, the government is ready to auction some of it off.

The Bitcoin is a public ledger, and if your identity gets linked to a wallet or address, everyone can see when you move coins. That’s what happened to the feds Thursday. The federally-seized Bitcoin was moved out of the two addresses — here and here — where it had been stored, a huge transfer of funds that was noted by those watching Bitcoin activity such as market data app Zeroblock. The Bitcoin addresses had been notated on Blockchain.info as “Silk Road Seized Coin” and “DPR Seized Coins” (for Dread Pirate Roberts, the pseudonym assumed by Silk Road’s overlord). “We are moving the Bitcoin in preparation for a sale,” says Lynzey Donahue, a spokesperson for the U.S. Federal Marshals, the agency tasked with selling off seized assets. The Marshals issued a press release, explaining that they are auctioning off the 30,000 seized from Silk Road, but not the coins seized from Ulbricht.

It’s an E-bay style auction for digital coin, taking place over a 12-hour period in two weeks, on June 27 from 6 a.m. until 6 p.m. Eastern. “Bids will be accepted by email from registered bidders using a form available from the U.S. Marshals Web page,” says the release. “In order to make a bid in this auction, potential bidders must register between the period of June 16 at 9 a.m. through June 23 at noon EDT and make a refundable deposit of $200,000 via wire transfer from a bank account in the United States.”

The new addresses for the Bitcoin are here (29,658 Bitcoin from the Silk Road) and here (144,341 Bitcoin from Ross Ulbricht). Ulbricht, who has plead not guilty, claimed his Bitcoin aren’t subject to civil forfeiture rules.

“The civil forfeiture action has been stayed pending the outcome of the criminal case,” said Ulbricht’s lawyer, Joshua Dratel, by email.

Press Release From the U.S. Marshals:

The U.S. Marshals are preparing to auction nearly 30,000 bitcoins in connection with a civil forfeiture and criminal action brought against Ross Ulbricht and the assets of Silk Road in October 2013 in federal court in the Southern District of New York.

The auction will take place during a 12-hour period on June 27 from 6 a.m. until 6 p.m. Eastern Daylight Time. Bids will be accepted by email from registered bidders using a form available from the U.S. Marshals Web page, www.usmarshals.gov/assets/2014/bitcoins.

In order to make a bid in this auction, potential bidders must register between the period of June 16 at 9 a.m. through June 23 at noon EDT and make a refundable deposit of $200,000 via wire transfer from a bank account in the United States. The bitcoins will be auctioned in nine blocks of 3,000 bitcoins and one block of approximately 2,657 bitcoins. The winning bidder(s) will be notified on June 30.

The bitcoins offered in this auction have been ordered forfeited to the United States. In a separate criminal case, Ulbricht has been charged with narcotics trafficking, computer hacking and money laundering offenses in connection with his alleged operation of “Silk Road,” a hidden Web site that was designed to enable its users to buy and sell illegal drugs over the Internet anonymously.

All the bitcoins that were held in an FBI wallet have been transferred to two U.S. Marshals wallets. One wallet is being used for this auction, and the other wallet is being used to hold the remaining approximate 144,342 bitcoins that are part of the civil forfeiture and criminal action brought against Ross Ulbricht and the assets of Silk Road.

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