Art by: Jing Jin
The U.S. Marshals have auctioned off the second group of Bitcoin seized from the Silk Road underground marketplace and its alleged owner today.
As we reported yesterday, the auction consisted of 50,000 Bitcoins, allegedly from the Silk Road's servers and from Ross Ulbricht, the man accused of running the Silk Road, computer. According to Reuters, the coins were auctioned off with permission from Ulbricht and his lawyer. If Ulbricht is found innocent the funds that came from his computer will be returned to him in cash value, otherwise they will be seized as proceeds of the crime.
The news comes as Ross Ulbricht's mother, Lyn Ulbricht, continues to speak out about the tactics used by law enforcement when obtaining the evidence used to charge Ross Ulbricht. The prosecution maintains that the evidence was obtained thanks to a leaky captcha form on the site, something the defense and many security experts around the web have stated is unlikely. If the prosecution's claimed method of obtaining the evidence that implicated Ulbricht is false, not only would that call into question the rest of their story, it would bring up serious constitutional issues on how they obtained that evidence.
The bitcoins being auctioned off have a current value of roughly $US 18.6 million. Due to price fluctuations, the value of this stash of Bitcoins is actually slightly lower than the first batch was at its time of sale, despite being significantly smaller in terms of Bitcoins included.
As was the case when the first batch was sold, the potential sudden influx of Bitcoin into the ecosystem may be partially to blame for a small decrease in Bitcoin's value. However, once again the virtual currency has proved resilient, holding around the $370 mark. This is likely because any price drop was due to investor speculation and not any actual increase in the currency's supply. As happened when Tim Draper bought the first batch of auctioned bitcoins, they were purchased as an investment and therefore are unlikely to be immediately dropped on the open market.
The U.S. Marshals also noted a significant lower number of bidders compared to the first auction, from 45 to 11. As a few publications have pointed out, a bidding period of about half as long as the original auction can be partially blamed. However, as Caleb Chen of CryptoCoinNews pointed out, investors may have learned from the first auction that the coins are likely to go for close or above their open value and therefore, the auction does not represent an opportunity for a quick cash-grab.
Also, as the second auction of seized Bitcoins the novelty factor of it may have worn off for some and the U.S. Marshal's incompetence in keeping the bidder's identity private the first time around may have been another factor. Of course there is also the fact that Bitcoin's value has seen a more or less steady decline in value since the beginning of this year.
173,991 bitcoins have been seized by government authorities during the case of this course. The first auction consisted of 30,000 bitcoins, with 50,000 getting auctioned off today, the remaining bitcoins believed to be held by government authorities sits around 90,000. 144,336 of the 173,991 coins allegedly came from Ulbricht's personal hardware.
According to the U.S. Marshal's spokesperson, the reason for auctioning off the coins slowly over time was to avoid overflowing the market. If we take them at their word, it is interesting to see that the authorities think enough about Bitcoin to consider their potential impacts on it and would actively work to minimize their negative impact. The remaining coins are set to be auctioned off in the coming months.
Ross Ulbricht is scheduled to appear in court on January 5th. You can donate to his legal defense fund by visiting the site run by Lyn Ulbricht. She, of course, accepts Bitcoin.
We will have more on the Silk Road auctions and Ross Ulbricht's case as it becomes available.
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