US holds final auction of bitcoins from Silk Road case

US holds final auction of bitcoins from Silk Road case

Reuters

The U.S. government on Thursday began its final auction of bitcoins seized during the prosecution of the creator of Silk Road, an online black market where the virtual currency could be used to buy illegal drugs and other goods.

The six-hour online auction began at 8:00 a.m. EST (1300 GMT) for about 44,341 bitcoins worth roughly $17.8 million.

The bitcoins are the last remaining in custody in connection with the federal prosecution of Ross Ulbricht, who authorities say ran Silk Road.

Silk Road operated for more than two years, generating more than $214 million in sales of drugs and other illicit goods using bitcoins, before being shut down in October 2013, prosecutors said.

Bitcoins are used as a vehicle for moving money around the world quickly and anonymously via the Web without the need for third-party verification. That has made it controversial, but also attractive, to users ranging from drug dealers to those trying to circumvent capital controls.

Ulbricht, 31, was sentenced to life in prison in May after a federal jury in Manhattan found him guilty of several charges, including distributing drugs through the Internet. Authorities said he ran Silk Road under the alias “Dread Pirate Roberts.”

The U.S. Marshals Service conducted auctions in June and December 2014 for nearly 80,000 bitcoins seized during the raid of Silk Road, and one this past March for 50,000 bitcoins.

Thursday’s auction includes 21 blocks of 2,000 bitcoins and one block of over 2,341 bitcoins. Winners will be notified Friday.

A Marshals Service spokeswoman declined to say how many potential bidders had registered.

Past winners of bitcoin auctions included Barry Silbert’s SecondMarket, billionaire venture capitalist Tim Draper and bitcoin exchange ItBit.

The latest auction comes amid a surge the price of the virtual currency, with the price of a single bitcoin hitting $500 on Wednesday for the first time since August 2014.

The price later fell, and on early Thursday a single bitcoin was worth $401.22, according to the Bitstamp exchange.

(Editing by W Simon)

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