For Sale: 50,000 Bitcoins | Hacker News Reader

For Sale: 50,000 Bitcoins

usmarshals.gov

273 pointsmartinko136 comments

I don't have a deep grasp of Civil Forfeiture but it seems like this is unusual considering DPR has not been convicted of anything yet. Is this part of a plea bargin or something similar?

http://en.wikipedia.org/wiki/Civil_forfeiture_in_the_United_...

from the link, and their all caps treatment preserved:

ON JANUARY 27, 2014, THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK ENTERED A STIPULATION AND ORDER FOR INTERLOCUTORY SALE OF BITCOINS WHEREIN THE UNITED STATES AND ROSS WILLIAM ULBRICHT AGREED THAT THE UNITED STATES MAY SELL ANY PORTION OR ALL OF THE COMPUTER HARDWARE BITCOINS ON A DATE OR DATES IN A MANNER TO BE DETERMINED BY THE GOVERNMENT.

So, it sounds like he clearly agreed to something, as he is mentioned by name here.

The "Computer Hardware Bitcoins" term is notable and I wonder to which statute it refers. What actions were taken or crime alleged where it would be important to characterize Bitcoins in this way?

I speculate that Ulbrict needs funds to pay attorneys fees. It may be he stipulated to a portion (or all) of the BTC as his in-exchange for unfreezing the asset and permitting its sale.

That term is parenthesized and quoted on the site, so it must refer to something in particular.

(“COMPUTER HARDWARE BITCOINS”)

EDIT-

They're referred to that way in the stipulation agreement he made to allow them to be sold

(pdf) http://www.usmarshals.gov/assets/2014/dpr-bitcoins/order.pdf

> The "Computer Hardware Bitcoins" term is notable and I wonder to which statute it refers.

It doesn't refer to a statute. It is a short form to refer to what is described in long form in the first paragraph of the notice as "THE BITCOINS CONTAINED IN WALLET FILES THAT RESIDED ON CERTAIN COMPUTER HARDWARE BELONGING TO ROSS WILLIAM ULBRICHT". (The same long description, and the explicit linkage of the same short form to that long description, is in the linked Stipulation and Order from the court allowing the sale.)

The stipulation also refers to the reason -- Ulbricht and the Government agreed to the sale to convert the bitcoins into dollars to protect both parties from risk due to volatility; the bitcoins are not being forfeited at this time, the forfeiture action will continue with the proceeds of the sale as the subject property rather than the bitcoins themselves.

It's amusing to see the url uses "dpr-bitcoins", DPR being the common community abbreviation for Dread Pirate Roberts. I mean, that's what they are, just funny to see the govt refer to him that way.

http://www.usmarshals.gov/assets/2014/dpr-bitcoins/

It is clearly in Ross's interests to permit the sale. He's not DPR, remember? So these aren't his bitcoins and he therefore doesn't care what happens to them.

In the agreement document he explicitly claims ownership, and agrees to the sale since the price may go down before they are returned to him.

Actually, these bitcoins are ones that Ulbricht claims are his, not the (much larger) set of bitcoins that weren't on his personal hardware which were linked to DPR which he did not claim (and which were the subject of an earlier sale.)

Oh, my bad. Sorry. I thought this was selling off more of the earlier Silk Road stash, not the "personal collection". Should have read more carefully.

How does he claim to have acquired them, or has he not made any statement on that yet?

When anything you say may be used against you, would you make any such public statement before the matter comes up in court?

Civil forfeiture is different from criminal forfeiture in that it does _not_ require a guilty verdict. Civil forfeiture is against the _property_, and it puts the burden of proof on the owner of the property to prove that it was obtained legally.

Here's another explanation of it that's probably better than mine: https://www.contributoria.com/issue/2014-08/539b517ba588a791...

So what happens if he legally obtained these bitcoins, but cannot prove that he did so?

So he basically loses them before he even can prove that they are his or not?

That doesn't seem right, it would make sense that the coins are held in an escrow status until he was proven guilty.. It seems to be a big loophole for the government to just go and steal whatever they want from you, before you've been proven guilty.

More people have noticed this, there has also been an item in John Olivers talkshow about it. Very funny, but also very sad.

http://www.huffingtonpost.com/2014/10/06/john-oliver-civil-f...

Also this, an article mentioned in the show:

http://www.washingtonpost.com/sf/investigative/2014/09/06/st...

>That doesn't seem right

It's not, and there has actually been a low-level national (US) dialog on the subject over the last month.

http://www.npr.org/blogs/thetwo-way/2014/11/10/363102433/pol...

Civil forfeiture is really screwed up [1].

>So he basically loses them before he even can prove that they are his or not?

Yes goods are guilty until proven innocent in court.

>It seems to be a big loophole for the government to just go and steal whatever they want from you, before you've been proven guilty.

It kinda is. Watch the link.

[1] https://www.youtube.com/watch?v=3kEpZWGgJks

> It seems to be a big loophole for the government to just go and steal whatever they want from you, before you've been proven guilty.

Happens all the time. You can be driving along, get pulled over, and the cop claims the money in your wallet is the result of illegal activities (usually drug dealing), and takes it. You can get it back by winning the civil lawsuit that will get filed: "Hazzard County Sheriff's Office vs. $150"

Is this constitutional? Lots of people don't think so, but the cops believe it is.

They believe it is until it's their own assets on the line.

It isn't right, but that's the reality of civil forfeiture in the United States.

Let's be honest: There is zero chance that Ross William Ulbricht obtained those coins legally.

While that may be beside the point, a rousing speech about how asset forfeiture should be changed would resonate more strongly if the subject was someone other than a person who hired people to murder others.

Also, it seems like supreme court justices aren't going to turn against asset forfeiture any time soon, so there's really no way to stop the practice.

EDIT: It's interesting how far people are twisting my words. I made two assertions: One, that there is no way Ulbrict obtained those coins legally, so if you want to reform asset forfeiture, choosing Ulbrict as your mascot would be a tactical mistake. Two, that unless you can convince the supreme court justices to turn against asset forfeiture, the practice will not change.

If you're reading into my words more than those two assertions, you're reading too far.

While we're being honest, I don't think there were ever charges filed against Ross for hiring anyone to kill anyone else

There have been charges filed and a pending trial in Maryland that includes these charges, while the current case is a separate trial in NY.

http://www.popehat.com/wp-content/uploads/2013/10/UlbrichtMa...

http://www.popehat.com/wp-content/uploads/2013/10/UlbrichtCr...

It would be comparable to saying that he should get a fair trial, even if everyone "knows" he's guilty.

Not really. Asset forfeiture has nothing to do with a fair trial. Those are two separate concepts under the US legal system.

Also, he is getting a fair trial.

Asset forfeiture against property is part of civil law and as such is still subject to the concept of a fair trial, even if in practice it often is not. The bar for conviction is lower but the process is still supposed to be considering what is fair. Just because it is civil law does not exempt it from that basic legal principle.

It's a lot less fair when your assets are seized (in general, not just the SR case). In fact, wasn't that part of the whole reason people accept seizure laws?

Allegedly. Just because the DA says so doesn't mean it's true.

What a terribly defeatist attitude. Of course it's easiest on the conscience to defend the morally upstanding members of society, but legal practice is (or should be) continuously reevaluated and updated to fit with current societal norms, without respect to savoriness of those whom would benefit in the current situation in question. Asset forfeiture has real and valid uses, and DPR's case may or may not be one of them. But to completely dismiss the discussion of the overreaches of the use of asset forfeiture throughout the US because DPR's case is "easy" seems like a cop out.

Your rationalization appears to boil down to "the status quo is the status quo, so we shouldn't bother trying to change it."

Not to dismiss the noble courts of sillysaurus, but I'd like to see Ross convicted in the court of law. With due process and all that jazz.

It seems like he's already been convicted in the court of public opinion.

Apparently we're not going to have a rational debate about this topic, which is unfortunate. For example, my comment had nothing to do with whether Ulbrict was convicted. It was strictly about asset forfeiture, which is a completely separate concept from having a trial. But of course a sarcastic one-liner is the most upvoted rebuttal.

Ulbrict is being given due process. He is also being given a fair trial. My observation is simply that there's no logical way he could have earned 50,000 BTC except by being an early miner or by running Silkroad, and apparently he wasn't an early miner.

Why is that important? Because if you're trying to change asset forfeiture, choosing which case to fight and who to defend is extraordinarily important. Let's say that the supreme court decides to reevaluate asset forfeiture, and let's say you've chosen Ulbrict as the case for them to reevaluate. Why give them more reasons to say "Our finding is that asset forfeiture is a legal and valid practice, and should not change"? By choosing Ulbrict, you aren't helping your cause.

A verdict like that will settle the debate of asset forfeiture for decades to come, so why risk such a crucial outcome so whimsically?

Because acting on observations such as yours is directly against the spirit of due process and lawful justice. Even if it's "obvious" he could not have obtained those bitcoins legally, that does not change the fact that the law enforcement should not touch it until the verdict.

I don't know how to make it any clearer, either you understand that having a lawful society requires following the law to the letter even if something is painfully obvious, or you don't.

Not much twisting is required when you state "There is zero chance that Ross William Ulbricht obtained those coins legally."

You could make your case without statements like that.

unless you can convince the supreme court justices to turn against asset forfeiture, the practice will not change

Not true at all. In fact the solution is infuriatingly obvious. Require a warrant for all civil forfeitures. The proponents say it's for taking down assets of cartels (and probably alleged purveyors of black markets like in this case) so warrant is easy to get. This would prevent cops rolling average citizens on routine traffic stops so they can finance margarita machines with "pennies from heaven".

A reform like this should be an easy bi-partisan sell to congress. If they can't do it at the Federal level any pol that campaigned as a libertarian or champion of small government should be pushing for this in state legislatures.

There is zero chance that Ross William Ulbricht obtained those coins legally.

Every single article that comes up about DPR or Silk Road, you post multiple comments prejudging literally every facet of the case. The quote above from you is a perfect example. Suppose for a minute that in addition to running the Silk Road, DPR also had a massive mining operation with multiple ASIC processors. Makes sense, right? His whole business was based on BTC - why in the world wouldn't he participate as a miner?

That is just one way that some or possibly all of the 50,000 coins at issue could have been obtained by DPR legally. Ya know, I hope you never get to find out what it's like to be accused of something because then you'll get to see what it feels like when people like you prejudge your guilt.

You have me confused with someone else. This is the first time I've mentioned Ulbrict or DPR in any comment: http://hn.algolia.com/#!/comment/forever/prefix/0/author%3As...

It's interesting how unapologetically ravenous people will be.

Also, if DPR was an early miner, then surely he would have said that by now.

He claimed ownership and agreed to allow them to be sold due to the volatility of the market. The proceeds will be held until the outcome of his case.

http://www.usmarshals.gov/assets/2014/dpr-bitcoins/order.pdf

> It seems to be a big loophole for the government to just go and steal whatever they want from you, before you've been proven guilty.

Nevertheless, that's how it works in the land of the free.

http://www.npr.org/blogs/thetwo-way/2014/11/10/363102433/pol...

Most legal activity (though not necessarily all) will involve paperwork and receipts, not least for the purposes of documenting your taxable income.

Civil forfeiture is often (though not always) used to clear up the legal status of assets found abandoned during a criminal investigation, eg if the DEA interrupts a drug bust and the buyers flee, leaving a few hundred thousand in cash behind. You could turn up to such a hearing and assert a legal claim to such assets along with an explanation of why they should not be forfeit, but if the assets are the proceeds of criminal activity then it's not worth it unless you have a truly outstanding cover story because you'd risk arrest or having the testimony at the hearing turn up in your criminal case.

IIRC in this case the feds got the bitcoin wallet information by seizing the Silk Road server, so they have a wholly reasonable presumption that the bitcoins are the assets of the (obviously illegal) drug brokerage business and probably a transaction log to back up this presumption.

> That doesn't seem right

Right has nothing to do with the law. Law is about what those with power can push through, it doesn't have anything to do with right and wrong.

> a big loophole for the government to just go and steal whatever they want from you, before you've been proven guilty

That's exactly what it is. It's truly terrible.

https://www.youtube.com/watch?v=3kEpZWGgJks

Technically, the burden is still on the state. However, the burden is much lower. The preponderance of evidence standard is used. That means if "more probable than not" that it was criminal proceeds the government wins.

Last Week Tonight with John Oliver has recently done a show summarizing the issue around Civil Forfeiture: http://www.youtube.com/watch?v=3kEpZWGgJks

Civil asset forfeiture cases in the US, insanely, have a reversed burden of proof and are in re actions against the assets to be seized. When assets are seized by law enforcement, you have to petition for them to be returned and prove that you came by them lawfully. You don't ever need to be convicted of or even charged with a crime in order to have your assets seized.

I don't know anything about how long law enforcement has to wait before selling your assets.

Should be in rem (against a thing) instead of in re (in a matter) in this case. The Latin preposition in can take the accusative case, in which case it means 'into, onto, against' or the ablative case, in which case it means 'in, inside of'.

Read this investigative series and become furious:

http://www.washingtonpost.com/sf/investigative/collection/st...

My understanding is this. The government found a bunch of bitcoins on a computer that may or may not have belonged to Ross Ulbricht, so they asked him "Are all these bitcoins yours?". Ross can't say that they are without admitting his guilt, so the government auctions them off.

Your understanding is wrong. From the order:

WHEREAS, on or about December 12, 2013, Ulbricht filed a timely verified claim in this proceeding, asserting an ownership interest in the Computer Hardware Bitcoins

To add to that, Ulbricht voluntarily agreed to this sale:

WHEREAS, the Government and Ulbricht agree that, due to the volatile market for bitcoins, the Computer Hardware Bitcoins risk losing value during the pendency of the forfeiture proceedings;

WHEREAS, the Government and Ulbricht agree that the Computer Hardware Bitcoins are to be liquidated or sold by the Government before the conclusion of the forfeiture proceedings, with the net proceeds of the sale to be held as substitute res pending further order of this Court;

Everyone seems to be going off on a tangent about civil forfeiture. From the order: http://www.usmarshals.gov/assets/2014/dpr-bitcoins/order.pdf

WHEREAS, the Government and Ulbricht agree that, due to the volatile market for bitcoins, the Computer Hardware Bitcoins risk losing value during the pendency of the forfeiture proceedings;

So basically, put the current value of the coins in escrow, instead of the coins themselves, in case they drop in value dramatically over time. Makes sense to me.

A forced sale of an asset is NOT the same as putting it into escrow.

What text on that excerpt leads you to believe this was forced?

The "US Marshalls" part.

You missed the "Government and Ulbricht agree" part.

Sounds like 3 wolves and a sheep agreeing on lunch plans.

So, in other words, only your own biases and preconceived notions.

Edit: I'd be curious to hear the side of you down voters. Do you have a legitimate gripe with the accuracy of what i said, or do you just blindly believe that everything the government does is evil?

So, in other words, only _your_ _own_ biases and preconceived notions. Edit: I'd be curious to hear the side of you down voters. Do you have a legitimate gripe with the accuracy of what i said, or do you just blindly believe that everything the government does is _for_the_greater_good_?

Your argument is just shallow and not very constructive and having it reversed should make that somewhat apparent.

Personally, the general consensus around these parts is that DPR was brought down with illegal methods by the FBI and then having the actual disclosure being horse shit (aka parallel construction). So yes, blindly trusting that the government is doing anything in good faith around this case is going to be pretty rare.

To recap: Kordless suggested that the sale was forced. EpicEng asked what indicated that it was forced. Sneak replied that "the 'US Marshalls' part" indicated that it was forced. EpicEng correctly noted that this does not strongly indicate that it was forced, and that to assume so based on the fact that the US Marshalls are involved is evidence of bias.

To further recap: EpicEng did not suggest that "everything the government does is for the greater good," nor did EpicEng even say that the sale was not forced — only that we don't have a compelling reason to believe it was.

Since EpicEng is merely asking for rational thought, I don't see how this can possibly be evidence of EpicEng's biases and preconceived notions.

As a side note, your phrasing here suggests that the only alternatives in your mind are "blindly trust the government" and "blindly accuse everyone involved with the government of any wrongdoing possible," which are both irrational positions. We can consider whether the government is doing something wrong without jumping to conclusions as the people EpicEng was replying to seemed to do.

It's nice to know that "the general consensus" is an arbiter of logic and reason now and anyone who does not conform to this opinion is on the other side of a false dichotomy who must be shown the error of their ways.

@kordless:

It says they agree. Doesn't sound forced.

Maybe it's one of those things that should not be allowed even if people agree to it.

What is? Selling bitcoins should not be allowed?

government selling your stuff even if you signed paper saying that you agree to it

every agreement you signed with government should be implicitly treated as coerced

they could also possibly go up in value.

does the government do the same with securities/stock owned too?

The Marshals Service manages various types of assets, including real estate, vehicles, commercial businesses, cash, financial instruments, jewelry, art, antiques, collectibles, vessels and aircraft.

The agency uses practices from private industry to ensure that assets are managed and sold in an efficient and cost-effective manner.

http://www.usmarshals.gov/assets/

Tangent: Does anyone know if it's standard practice for these sorts of arrangements to be made if other goods become part of forfeiture proceedings? (For instance, shares of a volatile mutual fund. Or, to take it out of the financial realm entirely, a truckload of perishable vegetables.)

I would guess that there has never been a case of a criminal investing their ill-gotten gains into "a truckload of perishable vegetables."

While not really an analogue, there is the delightfully-named United States v. Approximately 64,695 Pounds of Shark Fins.

https://en.wikipedia.org/wiki/United_States_v._Approximately...

http://www.independent.ie/irish-news/courts/garlic-man-begle...

Massive tax fraud case involving Secret Garlic; it happens :)

If the prosecution loses the case, it can be held liable in a civil case to losses the defendant made. So this is just an agreement between both sides to lower that risk and which does change nothing related to the case (so the judge will agree too). I guess, if there are no objections (even from a third party), this makes totally sense for anything else, too.

The IRS will go after him for capital gains tax after the sale. The document makes no mention of a provision for him to pay his taxes due from the proceeds of the sale.

Wouldn't that be good though? Then he's free to buy property and other things with his "laundered" money if he's cleared from any wrongdoing.

It's not that easy to convert a large amount of bitcoins into money that you can use effectively.

IANACPA I believe that's a nice advantage of bitcoin? I would think individuals could fly to the caymans to cash out and avoid tax?

Its worth noting that while they have been seized, they have not yet been forfeited -- that action is ongoing. The sale was agreed to secure the value and protect the government and Ulbricht both from price volatility; the forfeiture action will continue against the sale proceeds.

Civil forfeiture is one of the scariest areas of our legal system. The government essentially files a civil lawsuit against your property, and it then it's on you to get it back (the case titles are actually things like "USA vs. $25,000 US Currency"). This ability has created perverse consequences, such as turning police into nothing more than a band of highway robbers [1]. It's also used in drug cases, like DPR's, because it's far easier to obtain a civil judgment than a criminal one. He could be found not guilty on all counts, and still lose all of the money that this sale generates (he agreed to the sale of the coins in hopes of beating the civil forfeiture that will come later, but he has little chance of that).

[1] http://www.washingtonpost.com/opinions/tim-walberg-an-end-to...

ij.org has some good info about civil asset forfeiture.

WRT DPR, I would guess that in order to have any chance to successfully challenge the forfeiture he d likely find it necessary to incriminate himself.

Civil forfeiture does not require a criminal conviction of the owner of the property. Most importantly, in civil forfeiture it's not the owner who is on trial, it's the property. And unlike criminal law which works on the premise of presumption of innocence and requirements of proof of guilt "beyond reasonable doubt", asset forfeiture works based on civil law and the standard of "preponderance of evidence" (or a >50% probability of guilt).

you don't need to be guilty of anything for being victim of civil forfeiture.. they create a lawsuit against your property and property is considered guilty until proven innocent, unlike people.

What's sad is that this was half the point of bitcoins; they can't be easily seized. I hope the other DPRs are smart enough to have a system which moves their coins before the gov breaks the encryption on the wallets they seize in person.

There are many DPR-related bitcoins that they were unable to access. Fear not.

This was not "half the point of bitcoins" - the intent of the bitcoin release is only hinted at by Satoshi. Any point you are asserting here is pure speculation.

However, if you think this is a valuable property, a so-called "brainwallet" provides exactly this safety. They've been around for ages. No moving of coins required.

Where there really coins they didn't get? Source? (Not to dispute the claim, just interested)

About it being half the point: Perhaps not stated explicitly, but he knew what he was doing by not baking in a government back door. From the whitepaper: "any two willing parties to transact directly with each other"

I'm probably not getting the joke, but are there people who memorize their secret keys? I've never looked to see how long they are but I assume that's quite a feat.

Maybe it would be more correct to say that BTC can't be remotely seized.

half the point of bitcoin was to provide an alternative to so-called fiat currencies whose value is under the influence of govt policies. The idea was to be an electronic version of a return to the gold standard.

the other half was the flip side of that bitcoin.

No joke. Brainwallets use keys derived from a passphrase. Of course the passphase has to be reasonably long and something no one would ever guess, but even a randomly generated passphrase is easier to memorize than a long string of characters.

I could see this with physical bitcoins, but the fact that these are virtual bitcoins is certainly worrisome.

For scale, this is not even a day's worth of normal transactions. Yesterday about 177000 BTC was sent across the network, and that wasn't a big day.

A lot more than 177k BTC changed hands yesterday. You don't see it on the block chain because most of it is transacted off-chain: 788k BTC were sold and bought on Bitcoin exchanges in the last 24 hours - http://bitcoinity.org/markets/list?currency=ALL&span=24h So 50k BTC is really nothing (~6%) compared to what the market usually handles every day.

> because most of it is transacted off-chain

Does this come with risk? Shouldn't all transactions be on the chain?

On-chain transactions are much slower which is a different kind of risk.

Yep. Look what happens every time a bitcoin bank folds. Everyone who had coins in that bank rather than in their own wallet suddenly loses every coin they have.

I'm not sure why this was downvoted, it's a legitimate question.

The problem is the sheer quantity of transactions that occur on the various exchanges. Adding that volume to the public chain would make the public chain significantly larger than it is. The bitcoin.cc wiki Scalability page [1] does a better job of documenting the constraints than I could in this space.

The flip side of this is that there's a required level of trust when doing business with an exchange. Thus far no exchanges that I know of are actually publishing their ledgers - so we really have no way to know that all trades are made in good faith and all funds are properly managed by the exchanges.

Unlike regulated government currencies, there are no audit requirements. This means there is nothing that actually requires an exchange to be operating in good faith. I'm actually surprised that there are not yet any private exchanges[2] with public/open ledgers, in response to Mt Gox and various other scams (both for bitcoin and other currencies). Seems the market has to be there for it, after people have been burned so many times.

[1] https://en.bitcoin.it/wiki/Scalability [2] that I know of. I know there are protocols under development intended to handle this, but no actual exchanges that simply publish all transactions for the world to see.

[edit] can't believe I used 'shear' instead of 'sheer'.

Bitcoiners strike a balance with on-chain and off-chain transactions because Bitcoin has several properties which make it undesirable for many sorts of transactions. A short list would include 20~60+ minutes for transaction capture, lack of a way for merchants to initiate transactions (the dominant method in B2C commerce in the US), user-unfriendliness of much of the ecosystemic software, etc.

I wouldn't blindly trust the volume from the Chinese exchanges (over 80% percent of the entire volume). Some of them have zero fees, so you can essentially "sell" to yourself for free and generate fake volume.

This calculation is complicated by Bitcoin's handling of change, where (by analogy) spending $10 from a bank account with $10,000 in it can very easily result in $800 "moving across the network" even though $790 is just bouncing around in the same bank account.

How does this relate to the previous auction of approx. 30,000 seized bitcoins back in June?

http://www.coindesk.com/us-marshals-one-auction-bidder-claim...

That was the sale of the Silk Road 1 server's bitcoins - the bitcoins SR1 users had actually in the site, either deposited because they intended to buy something, locked up in escrow as part of an in-flight order, or not yet withdrawn by a seller.

This is Ross Ulbricht's personal bitcoins on his laptop and backup drives.

I'll keep an eye out for this. I think the final price will reach quite close to the market price with no guarantee of being able to sell at that price. Still might be worthwhile for someone to build up their position considerably without spooking the exchanges.

The question is, where will the market price be by the auction date? This news mean that a substantial amount of money that may have otherwise been used to buy BTC on the open market will now go towards this purchase.

Last time the US auctioned off bitcoins, the price was above market price [0]. A VC wanted to buy a large chunk of bitcoins for a company he invests in without driving up the price.

[0] http://www.bloomberg.com/news/2014-07-01/bitcoin-auction-end...

I don't see anywhere in your cited article that says the coins were purchased for more than market price. Can you point it out for me?

Additionally, if you were a rational investor who believed the coins were worth above market price, why would you not additionally buy up any coins on the market that were selling below that price? Ultimately, bidding up the market price to whatever the "above-market" bid was.

For a rational investor it would make sense to bid above "market" price. There are many markets, and those markets have a limited volume of coin to sell. Buying 30k coins would have a big effect on the price of any single market.

Bitstamp, which says "world's leading bitcoin exchange" about itself can't sell you 30k coins right now. Oh, and bitcoin exchanges have a history of.. let's call it.. problems.

A rational investor who wants to buy a large volume of coins would certainly bid above "market" price for coins handled by a reputable seller.

You seem to have misread my post. I didn't say that no one would bid above market price, I stated that they would additionally buy up all the coins on the market below their buying price.

Ah, you're right. But buying coin from different markets still has risks and takes time (which is money). Of course, it depends on your priorities.

Wouldn't that risk driving up the market price of bitcoins, which leads to a higher competing bid on the bulk coins?

Well you wouldn't want to do it before the bids are in. However, there was a gap between when bids are placed and when the winner is announced, that would be a good time.

edit: Of course, any time after the bids were completed would be a good time. After the auction ends would be just as good for you.

Nothing in that article states that the coins were sold above market price. The only publicly known data points were some significantly below-market bids (<$500 when the market price was ~$600) that did not win.

There were some public statements by executives at several bitcoin exchanges who revealed their losing bids, and they were close to (but below) market price, so it's not unthinkable that the winning bids were for market price or above.

According to Coinbase, the current buy price for bitcoin is $385. 385 x 50,000 = $19.2MM

Coinbase doesn't have enough volume to sell you 50k coins right now, you would hike the price towards infinity. You could buy something like 22k coins for 24M.

It seems to me that the several bitcoin auctions by the US government aren't that bad a thing for the cryptocurrency movement. To me, it provides a headline story that's sure to raise awareness of bitcoin for the general public (something that is certainly needed). Plus, it brings out the major bitcoin buyers. It's the equivalent of Sotheby's or Christie's having an auction of Picassos or Warhols.

It would be cool if bitcoins seized in one crime would be compensating bitcoins stolen in another crime: Mt.Gox ..

It is not the governments role to replace the stuff that was stolen from you. That is what insurance is for.

Especially Bitcoins, of which a key 'feature' is 'No Government Intervention required'.

Will be interesting to see how this announcement effects the price of bitcoins. I would imagine there will be an initial drop out of panic, but if we see some wealthy individuals with a vested interest in bitcoin buying these up, it could very much cause a large shift upwards in price.

> Will be interesting to see how this announcement effects the price of bitcoins.

That's what people asked last time when, if I remember correctly, the FBI was selling off some of the Silk Road coins. Nothing really happened, maybe a few percent drop, but that happens every day so I'm not even sure that was due to the sell.

To add more context, a well-known investor who happens to have significant influence ended up buying those bitcoins.

Right after the news broke we saw a relatively high volume dump pushing the price down by about 8%, from 410 to 375. Curious to see where it will go now. To be honest I expected a larger dump after this kind of news..

Funny it should have barely any effect on the price, but if the news caused this drop it is probably because people sold anticipating that the news would cause this drop.

I don't think so. You're assuming that BTC are somehow equally distributed :-) IMHO they are not ;-)

Would you care to elaborate?

Here: http://www.convalesco.org/blog/2014/02/11/on-the-matter-of-b...

I wonder if the people who were interested in this kind of thing before would be interested in buying bulk bitcoin again. Seems like it's all free money.

If bitcoin exchanges were an efficient market, there should be no drop, because this sale has been anticipated, just not the exact date. However it isn't an efficient market.

Marshals say there are 94 thousand more where that came from so if you're still scraping together the 100 grand to join the bidding, you'll have a couple more chances.

I wonder if they'll accept drugs?

How does a party go about determining a bid for something like this?

Oh, was there a trail and a guilty verdict I didn't hear about?

This guy calls it BS. Any thoughts?

http://trilema.com/2014/the-united-states-scammers-service-f...

It does seem odd that they don't release the name or price of the winning bid.

Well the winner of the first auction came forward voluntarily so it isn't like it was a mystery.

Looks like a crazy rant to me. This is the same process they used to sell a related stash of Bitcoin earlier this year. The winner of that auction was Tim Draper.

The world has gone insane.

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