Firms bid for bitcoin drug money

This afternoon, the US Marshals Service will auction 50,000 Bitcoins that were seized when online drugs marketplace Silk Road was shut down by the FBI last year.

The site’s successor, Silk Road 2.0, was also shut down by the FBI and European law enforcement agencies last month. Officers had succeeded in infiltrating the site last year and, in May, managed to identify the foreign server that powered the site. 100,000 people used the site to buy and sell illegal drugs, according to the FBI.

Ross William Ulbricht, the site’s alleged owner, was charged in 2012 with narcotics trafficking conspiracy, computer hacking conspiracy and money laundering conspiracy. The cryptocurrency on auction was seized from e-wallet files belonging to Ulbricht.

The last bitcoin auction by the US Marshals Service was won by venture capitalist Tim Draper, who bid for nearly 30,00 Bitcoins. Based on exchange rates at the time, the winnings would have been worthe $19m, although it is not clear how much Draper paid.

The value of bitcoin has fallen 38% since and the agency still has 94,000 Bitcoins left to shift – but experts say that this is unlikely to affect the prices fetched this afternoon.

The major bidders have been involved with bitcoin for a while and do not appear to be concerned about the current price,” analyst Gil Luria told Bloomberg.

“Even though the market for bitcoin is becoming increasingly liquid with a growing number of venues, the ability to buy big blocks from the government is still an attractive proposition.”

Bidding for the 50,000 Bitcoins on offer began at EST 08:00 (1pm UK time) and will last for six hours. The winner will be notified tomorrow.




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