Almost $13 million of confiscated bitcoin (A$16 million) will be sold next month at the first Bitcoin auction in Australia (and second in the world).
Reuters informs that the first bitcoin sale of such kind will be conducted by Ernst & Young. The first case of confiscated bitcoins auction took place last year when the US Marshals Service conducted several sales after the arrest and conviction of Ross Ulbricht, the mastermind behind online drug marketplace Silk Road.
Ernst and Young denied to reveal who the bitcoins were confiscated from. However, local news informed that this time 24,518 bitcoins were confiscated from an Australian man convicted of commercial drug trafficking in 2014. The auction will consist of 11 lots of 2,000 coins and one lot of approximately 2,518.
“This current wallet is an extremely large holding of Bitcoin,” said Adam Nikitins, transaction partner at Ernst & Young. “This will be a pretty hotly contested auction, more competitive than previous auctions because the price volatility has reduced.”
Ernst & Young forecasts that potential target audience of the auction will comprise of digital asset investment managers, digital currency exchanges, investment banks and hedge funds and mostly from North America and Europe.
“Eligibility mostly relies on the ability to transact,” said Nikitins of the rigorous registration process which requires a substantial deposit up front. “Given the quantum of Bitcoin that are going to the market, we want to make sure that people can complete the transaction.”
Traditionally, authorities choose off-market sales to deal with large quantities of seized property, especially if it concerns such liquid assets as currency or shares. According to Nikitins, “if the process is carried out through exchanges, the substantial sell order would drag the price considerably down.”
The auction will take place at 12.01am on June 20 and will last for 48 hours. Ernst & Young starts the registration for bitcoin auction on June 1 and it will run till June 7. Bidders have an opportunity to bid on one lot or multiple lots.
If talking about bitcoin, it is hard to deny that the cryptocurrency has a reputation of favorite payment method of drug dealers and dark online vendors. Indeed, Nikitins admits that many of the bidders are expected to be body corporates bidding on behalf of other parties. “If it’s body corporates that are bidding, and we expect many will be, the details of those individuals controlling those body corporates will be known to us,” he said. “It is crucial we are comfortable with the counter parties with whom we are transacting.”