USMS Might Sell Ross Ulbricht’s Bitcoins Below Market Price, Says Citi’s Steven Englander

The U.S. Marshals Service is likely to sell off 50,000 bitcoins, confiscated from Silk Road in 2013, at lower prices.

Photo: Kramchang/Flickr

Photo: Kramchang/Flickr

The US federal law enforcement agency, the US Marshals Service (USMS), could action off 50,000 bitcoins, seized from Silk Road marketplace in 2013, at a discount.

According to Citi’s head of forex strategy, Steven Englander, the recent price reduction of digital currency will urge auction participants to quote bids at lower price. In the internal note, written by Englander, he discussed the bidders who would want to “lowball their bids [on Bitcoins] relative to [their] current market place”.

Englander stated that making bids above the current bitcoin prices is irrational as there has been a possibility to acquire the cryptocurrency at lower prices recently and there are about 90,000 more of bitcoins the USMS is going to sell off.

This summer, the USMS auctioned off nearly 30,000 bitcoins seized from the dark web drug marketplace in October, 2013. At the time, all the bitcoins were purchased by Tim Draper at the prices above the market value. The following day after the auction, bitcoin price fell to $380 from $640.

Englander said: “My expectation is that most bids will be aggressively to the downside in the hope of getting a post-Black Friday bargain.”

“Bids for a block or two may be at a moderate discount to the market price, but I would expect the bid for the biggest number of blocks to be at a hefty discount.”

It is unknown how the action will influence the price of bitcoin. If look at the prior auction, this sale will unlikely have huge impact on the bitcoin prices, however, everything will depend on  the ultimate identity of the winning bidder.

The price changes will depend on whether the owner will prefer to sell the acquired digital currency or hold it, like Draper did. If the user chooses to sell bitcoins on the market, their value will likely to increase.

After the auction, the USMS will still possess approximately 100,000 bitcoins confiscated from Ulbricht’s computer.

Ross Ulbricht’s trial is planned to start in the beginning of 2015. He has already pleaded not guilty to seven charges, including money laundering, ID thefts, computer hacking and drug trafficking.

If Ulbricht wins his case, he will receive the money obtained in the auction back, but if he loses, the money will go to the asset forfeiture fund of the Department of Justice.

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