Posted in: Archive
January 17, 2014 7:58 AM

Feds Stand Poised To Dump Their Silk Road Bitcoins

Undoubtedly many readers have seen this wallet before, we’ve linked to it a lot here in articles on CCN.  Those are the “Silk Road Bitcoins” seized by a joint federal task force in the October take-down of the infamous online drug marketplace: Silk road.
During the take-down that included crazy antics by undercover agents at a public library in a brazen heist to steal Silk Road operator Ross Ulbricht’s laptop mid-session, the Feds were able to gain control of 29,655 Bitcoins from Silk Roads’ servers.  These Bitcoins belonged, in large part, to individual users of Silk Road from around the world.  Some of these users have even considered claiming no illicit activity on their part and seeking to claim their bit of the Feds’ loot.  Needless to say, said users are unlikely to be a consideration to the Feds.
Just today, the Manhattan U.S. Attorney’s office announced that Judge J. Paul Oetken had signed the forfeiture order for the Silk Road Bitcoins.  There are an additional 144,336 Bitcoins seized by the Feds off of Ulbricht’s hardware that Ross Ulbricht has filed a civil claim for.  He attests that those separate Bitcoins were his personal stash, and nothing to do with Silk Road.

“We have not yet determined exactly how the Bitcoins will be converted and liquidated,”

said Manhattan U.S. Attorney Office spokesperson Jim Margolin.  While continuing on to point out that there is yet to be a legal Bitcoin exchange in the United States and that the Feds would not go to Mt. Gox or BTC-e.
The Bitcoins will eventually be auctioned off, as those familiar with such forfeiture proceedings have come to expect.  Kashmir Hill of Forbes thinks that SecondMarket of New York, a firm that has bought over 70,000 Bitcoins for their Bitcoin Investment Trust from “merchants, miners, and early adopters” might buy the Bitcoins from the Feds.
This would be good news for Bitcoiners all around if the Bitcoins from the Feds, whether or not they eventually include the six figure sum from Ross Ulbricht’s wallet, can be sold “off exchange”.  The Feds taking their Bitcoins to an exchange would invariably crash the price, something it seems that the Feds don’t even want to do at this point.
Have a cryptic day, mis amigos.