Bitcoin Investment Trust Syndicate Wins 48,000 BTC in Second Silk Road Bitcoin Auction

The U.S. Marshals Service has announced that a syndicate of investors organized by the trading division of SecondMarket and its Bitcoin Investment Trust won 48,000 of the 50,000 bitcoins recently auctioned by the service.

The Bitcoin Investment Trust is designed for sophisticated investors looking for exposure to bitcoin in a simple investment vehicle. The BIT addresses the confusing and cumbersome experience of buying, storing and safekeeping large quantities of bitcoins as an investment. Photo: Siarhei Karotki/CoinSpeaker

The Bitcoin Investment Trust is designed for sophisticated investors looking for exposure to bitcoin in a simple investment vehicle. The BIT addresses the confusing and cumbersome experience of buying, storing and safekeeping large quantities of bitcoins as an investment. Photo: Siarhei Karotki/CoinSpeaker

Lynzey Donahue, a USMS spokeswoman, confirmed in an email (see it below) that the Bitcoin Investment Trust syndicate won the 48,000 bitcoins, adding that the transfer of the funds was completed on Monday, according to Reuters.

“The U.S. Marshals Service is confirming that the recent bitcoin auction resulted in two winning bidders. One bidder won 19 blocks, totaling 48,000 bitcoins, and the other won one block of 2,000 bitcoins. Because SecondMarket has voluntarily come forward, we can confirm that it was the winner of 48,000 bitcoins, and the transfer of those bitcoins was completed Monday.”

She added that USMS is holding an additional 94,341 of the coins seized from Silk Road’s Ulbricht, and that it plans to sell them ‘during the coming months.’

The Bitcoin Investment Trust (BIT) is a private, open-ended trust that is invested exclusively in bitcoin and derives its value solely from the price of bitcoin. It enables investors to gain exposure to the price movement of bitcoin without the challenges of buying, storing, and safekeeping bitcoins.

The exchange’s syndicate, which received 104 bids from eight parties, won 19 of the auction’s 20 Bitcoin blocks. According to Bitcoin.info’s Bitcoin Price Index, the coins had a value of $16,8 Million at the time of publication.

“Obviously, we’re very thrilled with the results,” said Brendan O’Connor, the managing director of trading at SecondMarket. Barry Silbert, the former CEO of SecondMarket, shared the news via Twitter.

Looking back, Tim Draper, an American venture capital investor and a founder of Draper Fisher Jurvetson, won 2,000 bitcoins at the auction. Draper previously won all of the 30,000 bitcoins auctioned by the USMS at its first bitcoin auction in June.

“Because SecondMarket has voluntarily come forward, we can confirm that it was the winner of 48,000 bitcoins,” the USMS said in the statement. ”The transfer of those bitcoins was completed Monday. The other winning bidder was a business entity.”

Brendan O’Connor said that there was enough demand within the syndicate for more than 2.5 times the number of bitcoins won at the auction. O’Connor declined to reveal how much SecondMarket paid for the coins. Besides, he declined to reveal details about the number and identity of the syndicate’s members.

On Tuesday Bitcoin was down 2 percent at $352.24. It had rose to a high of more than $1,000 in December last year, but lost more than 50 percent of its value in 2014 so far.

Bitcoin’s volatility, an aftermath of its decentralized nature and its small trading volume, has been a stumbling block to its growth.

“A lot of people are underwater in their Bitcoin positions this year,” said George Samman, chief operating officer at BTC.sx, a Bitcoin derivatives trading platform.

“The Bitcoin story is not as hot as it used to be. The whole ecosystem is growing by leaps and bounds and Bitcoin is being accepted more widely, but the price keeps going down. To consumers in general, price matters.”

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