VC Firm Makes Bid for FBI’s Seized Silk Road Bitcoins

Nermin Hajdarbegovic
Feb 25, 2014 at 20:22 UTC
Updated Feb 4, 2019 at 22:06 UTC

Investment firm Falcon Global Capital has contacted the US government expressing an interest in buying all of the bitcoins it seized from Silk Road – the online black market that was shut down by the FBI in October of last year.

The US has previously said that the coins will be liquidated, but did not say when or how the process would occur, or to whom they would be sold. The FBI holds 27,000 BTC from the seizure, which are worth around $14m at today’s exchange rates.

Whether the Falcon team is prepared to go the distance on the potentially huge transaction remains to be seen.

Huge stockpile

Falcon Global Capitals co-founder Brett Stapper told Business Insider that he has not received an official reply from the FBI, so it is still unclear whether the government is willing to make a deal.

Stapper said:

“We have secured backing from a group of private investors to purchase all 27,000 bitcoins for 15% below the daily value.”

It should be noted that the FBI has a lot of bitcoins to sell. In addition to drug-tainted Silk Road coins, the FBI has a much bigger stash: an estimate from Casey Research puts the figure between 5% and 10% of all bitcoins in circulation.

Filling the gap

While it might not be the best time to make such a deal, with troubles at Mt. Gox slashing confidence in bitcoin, Stapper points out that Falcon Global Capital is “not your average investment fund”. He added:

“We are young, hungry, and, eager to fill the gap between Wall Street and bitcoin.”

Falcon Global Capital describes itself as an SEC Regulation D Private Investment Fund that invests “solely in bitcoin markets”. Its mission is simple – the fund wants to allow accredited investors to acquire large amounts of bitcoins, anywhere from $25,000 up to $10m, and to store them safely.

The fund points out that purchasing and storing large amounts of bitcoins is notoriously challenging, so it aims to provide a simple service that can be used by the average investor.

Silk Road gambit

Stapper’s letter to the FBI made it clear that Falcon Global Capital is prepared to offer 15% below market value for the Silk Road forfeiture.

He also offered another option: if the US Government is not interested in selling the bitcoins to the company directly, Stapper is willing to act as consultant to the government, free of charge, to find the best and most profitable way of liquidating the seized bitcoins.

Either way, it would be an ironic end to the Silk Road saga – the government selling the dirty assets below cost to legitimate corporate investors.

If the US Government gives the green light on the deal, Stapper says Falcon Global Capital plans to store the bitcoins in “an insured bitcoin vault”, courtesy of UK-based Elliptic.

J Edgar Hoover building image via Shutterstock

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