UPDATE (12th June 11:30 BST): This article has been updated with new details on how interested bidders can register for the auction.
The US government is preparing to auction off roughly 30,000 bitcoins appropriated from the Silk Road online black market.
The bitcoins, worth approximately $17,898,600 at current market prices, are currently being held in two wallets owned by the US Marshals Service.
The auction will be held on 27th June from 06:00 to 18:00 (EDT), according to a press release published by federal government.
In a statement, the US Marshals Service said:
"The bitcoins offered in this auction have been ordered forfeited to the United States."
Placing your bid
As part of the auction, the Silk Road bitcoins will be divided into two phases for eligible bidders.
The US Marshals Service (USMS) has effectively split the 30,000 BTC into nine blocks of 3,000 BTC and 1 block of 2,656.51306529 BTC, known as 'Series A' and 'Series B' blocks, respectively.
All interested buyers must register with the US Marshals Service (USMS) in order to be eligible for the auction. Aspiring participants must provide the following to the federal agency:
- A $200,000 deposit sent by wire transfer from a bank located in the US
- A copy of a government-issued photo ID
- A manually signed PDF copy of the bidder registration form.
All required registration items must be delivered to a government email address (USMSBitcoins@usdoj.gov) by a designated deadline. The USMS will then contact each individual who submits a form by 17:00 on 26th June by approving or denying the submission. Any registration documents received after the deadline will not be considered, the agency says.
The federal agency added:
"If the USMS determines that you are not an eligible bidder, you will receive communication of that fact from the USMS, the deposit funds will be returned, and you will not be eligible to participate in the online auction."
The $200,000 deposits sent by the winning bidders will be retained by the USMS and used toward the final purchase price, though the individuals could lose their deposit under certain circumstances.
The auction process
Bids will also need to follow a strict process put forward by the USMS.
The statement reads:
"In order for your bid to be considered by the USMS, you must send a signed pdf copy of the Bid Form to a separate email address that will be provided to eligible bidders only within the online auction period window, which extends from June 27, 2014 at 6:00 A.M. EDT until 6:00 P.M. EDT. Bids received before or after the online auction period will not be considered. Bids that do not conform to the following instructions will not be considered."
Those who submit orders for multiple bitcoin blocks could receive any number of blocks up to the maximum total that they wish to acquire. For instance, should a bidder submit a request for six Series A blocks, they could be awarded up to six of these allotments.
The winning bidder will be the individual who offers the highest bid, the USMS says. Should there be a tie, the first bid received will be the prevailing bid.
The US Marshals Service (USMS) said that the 29,657BTC is located in this wallet.
Strict rules for auction
The rules state that the auction bidders will need to pay for their bitcoin via an all-cash wire transfer. The USMS will notify auction winners on 30th June.
There is a deadline of 1st July for winning bidders to pay for the bitcoins. The rules also stipulate that the funds cannot be transferred to a bitcoin address publicly known to be located in a country restricted by the Office of Foreign Assets Control (OFAC).
Additionally, bidders are being required to certify that they are not acting on the behalf of anyone representing Silk Road or its alleged proprietor, Ross William Ulbricht.
The terms state that the USMS has the right to deny anyone from buying any block of bitcoin, as well as the right to sell only a portion or withdraw the bitcoins from auction at its discretion.
Questions about interested parties
It remains to be seen whether those who have previously expressed interest in the Silk Road bitcoins will submit a bid during the USMS auction.
In February, it was reported that the investment firm Falcon Global Capital contacted the US government regarding buying seized Silk Road bitcoins. At the time, co-founder Brett Stapper stated that the firm had acquired financial support to purchase the bitcoins seized from Silk Road.
CoinDesk reached out for comment, but representatives from Falcon Global have not yet replied in regards to this latest development.
The full statement from the federal government reads:
The US Marshals are preparing to auction nearly 30,000 bitcoins in connection with a civil forfeiture and criminal action brought against Ross Ulbricht and the assets of Silk Road in October 2013 in federal court in the Southern District of New York.
The auction will take place during a 12-hour period on June 27 from 6 a.m. until 6 p.m. Eastern Daylight Time. Bids will be accepted by email from registered bidders using a form available from the US Marshals Web page, www.usmarshals.gov/assets/2014/bitcoins.
In order to make a bid in this auction, potential bidders must register between the period of June 16 at 9 a.m. through June 23 at noon EDT and make a refundable deposit of $200,000 via wire transfer from a bank account in the United States. The bitcoins will be auctioned in nine blocks of 3,000 bitcoins and one block of approximately 2,657 bitcoins. The winning bidder(s) will be notified on June 30.
The bitcoins offered in this auction have been ordered forfeited to the United States. In a separate criminal case, Ulbricht has been charged with narcotics trafficking, computer hacking and money laundering offenses in connection with his alleged operation of “Silk Road,” a hidden Web site that was designed to enable its users to buy and sell illegal drugs over the Internet anonymously.
All the bitcoins that were held in an FBI wallet have been transferred to two US Marshals wallets. One wallet is being used for this auction, and the other wallet is being used to hold the remaining approximate 144,342 bitcoins that are part of the civil forfeiture and criminal action brought against Ross Ulbricht and the assets of Silk Road.
Gavel image via Shutterstock