US Marshals announce $1.6 million bitcoin auction

The U.S. Marshals Service (USMS) recently announced a new bitcoin auction. Just over 2,719 bitcoins are to be sold to a single winner on Monday, 22 August. Worth about  $1.6 million at current market rates, the coins come from “various federal criminal, civil and administrative cases,” according to the Marshals Service.

This is the fifth bitcoin auction from the USMS, and is once again available to pre-approved bidders only. Interested parties must register between now and noon on Thursday, August 18, Eastern Daylight Time. Those who wish to do so need only fill out this form with the USMS, have a photo ID ready, and include a $100,000 deposit.

“This sealed bid auction is for 2,719.32669068 bitcoins in one block. The required deposit to participate in this auction is $100,000.00 USD.”
— – U.S. Marshals Service

Bidding will take place over six hours, between 8:00 AM EDT to 2:00 PM EDT on the 22nd. The winners will be notified by 5 P.M. the same day, and they need to be able to wire the remaining funds to the USMS immediately.

Reuters reports that the majority of the bitcoins, 1,294, come from the civil forfeiture case of a Silk Road drug dealer named Matthew Gillum, who was sentenced to nine years in prison after his conviction in 2015.

2.8 bitcoins are from the Ross Ulbricht estate. Ulbricht was convicted of creating and running the infamous Silk Road early in 2015, and is currently serving a life sentence without the possibility of parole.

A former U.S. Drug Enforcement Administration agent, Carl Force, provided another source of seized bitcoin. Force was found guilty of extorting Ross Ulbricht before his conviction, was sentenced to 78 months in prison, and forfeited 65 bitcoins.

Another 664 coins were seized from Sean Roberson, a Florida man convicted of running an online store selling counterfeit credit and debit cards. Four separate U.S. Customs and Border Protection agency cases were also listed by the USMS.

“The USMS reserves the right to reject any bid for any reason whatsoever.”
— – U.S. Marshals Service

The four previous USMS bitcoin auctions, between June 2014 and November 2015, have all been composed of only Silk Road coins.

The first bitcoin auction happened on 27 June 2014. 45 bidders competed for 30,000 confiscated bitcoins, split into 11 blocks. After the dust had settled, it turned out that every block had been bought by venture capitalist and founder of Draper University, Tim Draper.

The second auction was in held on 4 December that same year, when far fewer bidders registered to buy 50,000 coins. While Tim Draper won one of these blocks too, 48,000 bitcoins were sold to a consortium of bidders organized by the investment service SecondMarket.

The third USMS bitcoin auction, held in March 2015, offered another 50,000 coins. Of the three winners, New York based Bitcoin Exchange ItBit was the only publicly identified winner, buying 3,000 bitcoins. 20,000 bitcoins went to an unnamed buyer.

Blockchain-watchers claim to have identified a third winner, who purchased 27,000 BTC. Cumberland Mining company is a parent company for Digital Asset Holdings. The company has since opened their doors as an Over-The-Counter bitcoin market, selling coins at bulk pricing.

The latest USMS bitcoin auction, held on 5 November 2015, was for 44,000 bitcoins. These we thought to be the last of Ross Ulbricht’s coins. ItBit won another 10,000 coins during the event, and the rest of the bidders remain anonymous.

“Interest in this technology continues to grow. The number of bitcoin transactions since 2012 has quadrupled and parties are seeing more opportunities and uses for the technology.”
— – Adam Nikitins, Ernst & Young Transactions Partner

The U.S. government isn’t the only one to hold an auction for bitcoins. 24,518 bitcoins were sold last June in Australia. Ernst & Young sold the coins, which were confiscated by the Australian government in 2014. Blockchain forensics points out that three different, unnamed winners took home those coins.

Despite traders being fearful of auction winners dumping bitcoin on the open market and driving the price down, the record shows that these auctions typically have a positive effect on bitcoin’s price.

After the first auction in June 2014, the price of bitcoin went from $580 to $650 in a week, before slowly trending down. The most recent completed USMS auction, in December saw the price rise $100 in 11 days.

The Australian auction was the exception, with the price of bitcoin declining steeply over the following two days. However, the entire cryptocurrency community was watching the immediate aftermath of the DAO exploit at the time.