Updated: Silk Road Bitcoin Auction Winners And Losers Slowly Revealing Themselves

June 30, 2014 22:39 UTC
Bitcoin seized from Silk Road is being auctioned off by the US Government

Update (12:00 PM CST): USMS has confirmed with CoinDesk and CoinFire that they will release an announcement this afternoon. No further details were furnished.

Update (4:00 PM CST): The USMS has reported that 1 anonymous bidder outbid all other 44 bidders for all of the auctioned Bitcoin. The winning bid is still undisclosed. At this point, it seems that the single winner probably has incentive to not reveal his winning bid. However, if all the losers come forward we could have a better idea of the winning bid.

What an auction!

Bitcoiners around the world, not just in America, are eagerly awaiting more news about the Silk Road Bitcoin Auction currently coming to a close. Official bidding on the Silk Road bitcoins ended last Friday, June 27th. Over the course of 12 hours, 63 bids were collected on the nearly 30,000 bitcoins being auctioned in blocks of 3,000. Currently, the US Marshals Service (USMS) is privately notifying both winners and losers of the auction. Some bidders, such as Barry Silbert’s inclusive Bitcoin Syndicate, have revealed that they have lost with their bids on all blocks.

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Who Were The Bidders?

The information that the public has on the bidders in this auction has not come from the USMS at all. Only intentional reveals by firms such as Circle, SecondMarket, Binary Financial, Pantera Capital, and Bitcoin Shop have aided in the public’s understanding of the closed-door auction. The USMS does not usually reveal the winners of auctions to the public; however, they have hinted to CoinDesk that further announcements might be forthcoming. Yet another sign of just how important this auction is for both the US government and the Bitcoin community at large.

The USMS have told CoinDesk, specifically:

“The award process is ongoing, so we do not have the final number of winning bidders yet.”

Barry Silbert led SecondMarket and the Bitcoin Investment Trust in forming a syndicate to allow smaller bidders to potentially get a chunk of the USMS’s Silk Road Bitcoin Auction. Individual auction attendees needed to submit a $200,000 USD deposit from an American bank to be part of the 45 registered bidders. The Bitcoin Syndicate allowed users to join and bid with only a $25,000 USD deposit to SecondMarket, 10% of the fees generated from this service are being donated to the Electronic Frontier Foundation.

Despite coming out of the woodwork to announce that SecondMarket and the Bitcoin Investment Trust’s Bitcoin Syndicate had been outbid on all blocks, Barry Silbert was tight-lipped on what the defeated bid amount was. The community would love to know exactly what the amount of the losing bids are, even if they only provide limited insight to the pressing question: What were the winning bids? A confirmed losing bid comes from Alex Waters, who admits he bid under market value. Another confirmed defeated under market value bid comes from Bill Lee, who thought he was bidding on coins from Mt. Gox. BitcoinShop entered bids through the Bitcoin Syndicate and by themselves, and has since revealed their own loss, without any indication of their bidding price.

Tweets from Pantera suggest that the USMS will announce results in the next few hours (7/1 update: still nothing from the USMS), they also bid below market value. Though others are not as optimistic, noting that the USMS specifically states:

“The USMS will contact the winning and losing bidders directly. The USMS will not publicly release any information pertaining to the auction process or results.”

Will the USMS cater to the community’s demands? Whatever the results, and however they are revealed, there is no doubt that the hubbub is effecting the Bitcoin price.

Regardless Of The Auction Results, The US Government Has Given Bitcoin Tremendous Legitimacy

Let’s take a step back and acknowledge how monumental it is that millions of dollars worth of Bitcoin are being auctioned off by the United States government. Even a calendar year ago, few in the community would have predicted that any scenario remotely similar to the current atmosphere would happen any time soon. The fact that the USMS is selling Bitcoin, which the IRS treats as a property, proves without a doubt the fungibility of Bitcoin. This Silk Road Bitcoin Auction is already turning out to be one of the largest, if not most publicized, USMS auction in recent history with an anticipated total of over $18 million USD. For comparison, this USMS auction of 100’s of collector cars was only expected to generate several million in revenue. As such, mainstream media has been changing their tune about Bitcoin over the last year after the Twain-channeling over-exaggerated reports of Bitcoin’s death following the April 2013 bubble. The government seizes plenty of “stuff” that is used as currency in many parts of the world that could not conceivably be sold in a legitimate auction. The world now knows that Bitcoin is more akin to Al Capone’s cars than Pablo Escobar’s cocaine.

Last modified: July 2, 2014 00:04 UTC

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Caleb is a graduate of the University of Virginia where he studied Economics, East Asian Studies, and Mathematics. He is currently pursuing his MSc in Digital Currency at the University of Nicosia.