US Marshals Service Concludes the 3rd Auction, Bitcoin Prices Are Not Below Market

On March 5, 2015, the US Marshals concluded its third auction of bitcoins seized from Ross Ulbricht.

Photo: U.S. Marshals Service/Egor Pavlovich

Photo: U.S. Marshals Service/Egor Pavlovich

The third bitcoin auction organized by the U.S. government was concluded marking the end of one of the oddest US auctions. The auction was part of a cache of bitcoins seized by the FBI after the shutdown of the Silk Road website. Ross Ulbricht, its owner, was convicted for running the web-site where anonymous customers were able to buy and sell illegal drugs.

When the coins were confiscated from the Silk Road marketplace, many thought that the government would not sell them.  Anyway, the first auction was held in June, 2014 and the second one was conducted in December. It’s worth saying that this time, demand was pretty high, but not as high as at the time of the summer auction.

To participate in the auction, the bidders had to prove their identities and show they had enough money to make a deposit before placing a bid. Barry Silbert(SecondMarket Inc.), Dan Morehead(Pantera Capital), and Kardashev Capital were among 14 participants who submitted 34 bids for the bitcoins. There were 10 blocks of 3,000 bitcoin and 10 blocks of 2,000 bitcoin available for bid. According to Kardashev Capital, whose bid of $221.51 per bitcoin was approximately 17 % under the market value of the coins, they did not win any lots. Bloomberg reports that SecondMarket also failed to win any blocks of bitcoin.

“While we’re disappointed to learn that we weren’t a winning bidder, I’m glad to hear that the bitcoins sold closer to or even above market price,” said Kardashev Capital partner Greg Gum.

Techcrunch says that it’s fascinating that the US government managed to sell bitcoins. The government was looking to sell the seized bitcoin in January 2014, but the auction process started only after 6 months. In addition, in that period of time, a lot of hackers tried to find out where the BTC came from and went. Many of them even targeted Silk Road auction bidders with phishing scams.

According to Bitcoin Magazine, 130,000 bitcoins have been sold during the auctions held by the U.S. Marshals. Lynzey Donahue, a spokeswoman for the U.S. Marshals, says that the government has 44,341 bitcoins left to sell after the third auction. The Marshals said that the last remaining amount of bitcoin would be sold in a similar auction in the future.

However, the auctions mean that the government is now out of the Bitcoin business. Such a prospect is quite relieving for BTC fans who feared that the government would use the coins “to manipulate prices or drive up demand,” reports Techcrunch.

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