
For Sale: 50,000 Bitcoins - martinko
http://www.usmarshals.gov/assets/2014/dpr-bitcoins/
======
zwtaylor
I don't have a deep grasp of Civil Forfeiture but it seems like this is
unusual considering DPR has not been convicted of anything yet. Is this part
of a plea bargin or something similar?

~~~
emhart
from the link, and their all caps treatment preserved:

ON JANUARY 27, 2014, THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK ENTERED A STIPULATION AND ORDER FOR INTERLOCUTORY SALE OF
BITCOINS WHEREIN THE UNITED STATES AND ROSS WILLIAM ULBRICHT AGREED THAT THE
UNITED STATES MAY SELL ANY PORTION OR ALL OF THE COMPUTER HARDWARE BITCOINS ON
A DATE OR DATES IN A MANNER TO BE DETERMINED BY THE GOVERNMENT.

So, it sounds like he clearly agreed to something, as he is mentioned by name
here.

~~~
rrggrr
The "Computer Hardware Bitcoins" term is notable and I wonder to which statute
it refers. What actions were taken or crime alleged where it would be
important to characterize Bitcoins in this way?

I speculate that Ulbrict needs funds to pay attorneys fees. It may be he
stipulated to a portion (or all) of the BTC as his in-exchange for unfreezing
the asset and permitting its sale.

~~~
dragonwriter
> The "Computer Hardware Bitcoins" term is notable and I wonder to which
> statute it refers.

It doesn't refer to a statute. It is a short form to refer to what is
described in long form in the first paragraph of the notice as "THE BITCOINS
CONTAINED IN WALLET FILES THAT RESIDED ON CERTAIN COMPUTER HARDWARE BELONGING
TO ROSS WILLIAM ULBRICHT". (The same long description, and the explicit
linkage of the same short form to that long description, is in the linked
Stipulation and Order from the court allowing the sale.)

The stipulation also refers to the reason -- Ulbricht and the Government
agreed to the sale to convert the bitcoins into dollars to protect both
parties from risk due to volatility; the bitcoins are not being forfeited at
this time, the forfeiture action will continue with the proceeds of the sale
as the subject property rather than the bitcoins themselves.

------
DickingAround
What's sad is that this was half the point of bitcoins; they can't be easily
seized. I hope the other DPRs are smart enough to have a system which moves
their coins before the gov breaks the encryption on the wallets they seize in
person.

~~~
sneak
There are many DPR-related bitcoins that they were unable to access. Fear not.

This was not "half the point of bitcoins" \- the intent of the bitcoin release
is only hinted at by Satoshi. Any point you are asserting here is pure
speculation.

However, if you think this is a valuable property, a so-called "brainwallet"
provides exactly this safety. They've been around for ages. No moving of coins
required.

~~~
DickingAround
Where there really coins they didn't get? Source? (Not to dispute the claim,
just interested)

About it being half the point: Perhaps not stated explicitly, but he knew what
he was doing by not baking in a government back door. From the whitepaper:
"any two willing parties to transact directly with each other"

I'm probably not getting the joke, but are there people who memorize their
secret keys? I've never looked to see how long they are but I assume that's
quite a feat.

~~~
jpindar
No joke. Brainwallets use keys derived from a passphrase. Of course the
passphase has to be reasonably long and something no one would ever guess, but
even a randomly generated passphrase is easier to memorize than a long string
of characters.

------
lucb1e
For scale, this is not even a day's worth of normal transactions. Yesterday
about 177000 BTC was sent across the network, and that wasn't a big day.

~~~
mrb
A lot more than 177k BTC changed hands yesterday. You don't see it on the
block chain because most of it is transacted off-chain: 788k BTC were sold and
bought on Bitcoin exchanges in the last 24 hours -
[http://bitcoinity.org/markets/list?currency=ALL&span=24h](http://bitcoinity.org/markets/list?currency=ALL&span=24h)
So 50k BTC is really nothing (~6%) compared to what the market usually handles
every day.

~~~
drzaiusapelord
> because most of it is transacted off-chain

Does this come with risk? Shouldn't all transactions be on the chain?

~~~
GrinningFool
I'm not sure why this was downvoted, it's a legitimate question.

The problem is the sheer quantity of transactions that occur on the various
exchanges. Adding that volume to the public chain would make the public chain
significantly larger than it is. The bitcoin.cc wiki Scalability page [1] does
a better job of documenting the constraints than I could in this space.

The flip side of this is that there's a required level of trust when doing
business with an exchange. Thus far no exchanges that I know of are actually
publishing their ledgers - so we really have no way to know that all trades
are made in good faith and all funds are properly managed by the exchanges.

Unlike regulated government currencies, there are no audit requirements. This
means there is nothing that actually requires an exchange to be operating in
good faith. I'm actually surprised that there are not yet any private
exchanges[2] with public/open ledgers, in response to Mt Gox and various other
scams (both for bitcoin and other currencies). Seems the market _has_ to be
there for it, after people have been burned so many times.

[1]
[https://en.bitcoin.it/wiki/Scalability](https://en.bitcoin.it/wiki/Scalability)
[2] that I know of. I know there are protocols under development intended to
handle this, but no actual exchanges that simply publish all transactions for
the world to see.

[edit] can't believe I used 'shear' instead of 'sheer'.

------
pimlottc
How does this relate to the previous auction of approx. 30,000 seized bitcoins
back in June?

[http://www.coindesk.com/us-marshals-one-auction-bidder-
claim...](http://www.coindesk.com/us-marshals-one-auction-bidder-claimed-
all-30000-silk-road-bitcoins/)

~~~
gwern
That was the sale of the Silk Road 1 server's bitcoins - the bitcoins SR1
users had actually in the site, either deposited because they intended to buy
something, locked up in escrow as part of an in-flight order, or not yet
withdrawn by a seller.

This is Ross Ulbricht's personal bitcoins on his laptop and backup drives.

------
xchaotic
I'll keep an eye out for this. I think the final price will reach quite close
to the market price with no guarantee of being able to sell at that price.
Still might be worthwhile for someone to build up their position considerably
without spooking the exchanges.

~~~
dkyc
Last time the US auctioned off bitcoins, the price was above market price [0].
A VC wanted to buy a large chunk of bitcoins for a company he invests in
without driving up the price.

[0] [http://www.bloomberg.com/news/2014-07-01/bitcoin-auction-
end...](http://www.bloomberg.com/news/2014-07-01/bitcoin-auction-ends-single-
bidder-wins-entire-cache.html)

~~~
rebel
I don't see anywhere in your cited article that says the coins were purchased
for more than market price. Can you point it out for me?

Additionally, if you were a rational investor who believed the coins were
worth above market price, why would you not additionally buy up any coins on
the market that were selling below that price? Ultimately, bidding up the
market price to whatever the "above-market" bid was.

~~~
nkuttler
For a rational investor it would make sense to bid above "market" price. There
are many markets, and those markets have a limited volume of coin to sell.
Buying 30k coins would have a big effect on the price of any single market.

Bitstamp, which says "world's leading bitcoin exchange" about itself can't
sell you 30k coins right now. Oh, and bitcoin exchanges have a history of..
let's call it.. problems.

A rational investor who wants to buy a large volume of coins would certainly
bid above "market" price for coins handled by a reputable seller.

~~~
rebel
You seem to have misread my post. I didn't say that no one would bid above
market price, I stated that they would additionally buy up all the coins on
the market below their buying price.

~~~
nitid_name
Wouldn't that risk driving up the market price of bitcoins, which leads to a
higher competing bid on the bulk coins?

~~~
rebel
Well you wouldn't want to do it before the bids are in. However, there was a
gap between when bids are placed and when the winner is announced, that would
be a good time.

edit: Of course, any time after the bids were completed would be a good time.
After the auction ends would be just as good for you.

------
dntrkv
According to Coinbase, the current buy price for bitcoin is $385. 385 x 50,000
= $19.2MM

~~~
nkuttler
Coinbase doesn't have enough volume to sell you 50k coins right now, you would
hike the price towards infinity. You could buy something like 22k coins for
24M.

------
softdev12
It seems to me that the several bitcoin auctions by the US government aren't
that bad a thing for the cryptocurrency movement. To me, it provides a
headline story that's sure to raise awareness of bitcoin for the general
public (something that is certainly needed). Plus, it brings out the major
bitcoin buyers. It's the equivalent of Sotheby's or Christie's having an
auction of Picassos or Warhols.

------
logician76
It would be cool if bitcoins seized in one crime would be compensating
bitcoins stolen in another crime: Mt.Gox ..

~~~
megablast
It is not the governments role to replace the stuff that was stolen from you.
That is what insurance is for.

~~~
NeutronBoy
Especially Bitcoins, of which a key 'feature' is 'No Government Intervention
required'.

------
Aaronneyer
Will be interesting to see how this announcement effects the price of
bitcoins. I would imagine there will be an initial drop out of panic, but if
we see some wealthy individuals with a vested interest in bitcoin buying these
up, it could very much cause a large shift upwards in price.

~~~
lucb1e
> Will be interesting to see how this announcement effects the price of
> bitcoins.

That's what people asked last time when, if I remember correctly, the FBI was
selling off some of the Silk Road coins. Nothing really happened, maybe a few
percent drop, but that happens every day so I'm not even sure that was due to
the sell.

~~~
zeeshanm
To add more context, a well-known investor who happens to have significant
influence ended up buying those bitcoins.

------
devindotcom
Marshals say there are 94 thousand more where that came from so if you're
still scraping together the 100 grand to join the bidding, you'll have a
couple more chances.

------
Aqueous
I wonder if they'll accept drugs?

------
sidhire
How does a party go about determining a bid for something like this?

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adnam
Oh, was there a trail and a guilty verdict I didn't hear about?

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pingec
This guy calls it BS. Any thoughts?

[http://trilema.com/2014/the-united-states-scammers-
service-f...](http://trilema.com/2014/the-united-states-scammers-service-
formerly-marshalls-service/)

~~~
wmf
It does seem odd that they don't release the name or price of the winning bid.

~~~
pmorici
Well the winner of the first auction came forward voluntarily so it isn't like
it was a mystery.

------
jnardiello
The world has gone insane.

