While all eyes have been on the Silk Road 2.0 and its alleged operator Blake Benthall this month, the U.S. Marshals Service (USMS) announced Monday that it will auction off 50,000 Bitcoin belonging to Ross Ulbricht, the alleged mastermind of the original Silk Road, in December.
In June, the USMS auctioned off approximately 30,000 Bitcoins seized from the Silk Road servers in October 2013, but held onto more than 144,000 Bitcoin found on Ulbricht's computer hard drive. Now, six months later, the USMS has announced its plan to auction off the first third of Ulbricht's Bitcoin. From 8 a.m. to 2 p.m EST on December 4, 50,000 Bitcoin--currently worth $20 million--will be auctioned off over email. All potential bidders must register by noon on December 1, and the winning bidders will be notified the day after the auction.
The money earned in the auction will sit in an escrow until Ulbricht's court case is concluded, USMS spokesperson Lynzey Donahue said. Ulbricht's trial is currently scheduled to begin January 5, 2015, after being delayed from its original start date in early November. While he has pleaded not guilty to seven drug trafficking, money laundering, computer hacking, and ID theft charges, Ulbricht says he is the owner of the Bitcoin on his computer, according to a claim in the civil forfeiture action. If Ulbricht wins his court case, he will receive the money obtained in the auction. If he loses, the money will go to the Department of Justice's asset forfeiture fund, Donahue explained.
After next month's auction is over, the USMS will still be in possession of nearly 100,000 Bitcoin seized from Ulbricht's computer. Donahue expects that the rest of Ulbricht's bitcoin will be auctioned off in the "coming months," although no dates have been set.
Secret Money: Living on Bitcoin in the Real World, by Forbes staff writer Kashmir Hill, can be bought in Bitcoin or more traditional currencies.
There will likely soon be more Bitcoin in the U.S. government's wallet following the seizure of the Silk Road 2.0 and many other "Dark Market websites" in Operation Onymous earlier this month. On November 6, the FBI seized the servers of the Silk Road 2.0 and arrested Blake "Defcon" Benthall, the alleged operator of this second online drug marketplace. The Silk Road 2.0 was just one of many Tor marketplaces seized in the next 24 hours through a global law enforcement effort called Operation Onymous. Seventeen people were arrested and $1 million in Bitcoin was also seized during the operation.
On November 7, the United States filed a forfeiture motion for 27 "Dark Market Websites" seized during Operation Onymous, including Silk Road 2.0. In response, Judge Paul Oetken ordered that the U.S. government is "authorized to seize any and all Bitcoins or other digital currency residing on any server hosting a Dark Market Site" and transfer the currency to a U.S. repository, pending the outcome of the case.
I asked Donahue if the USMS expected to auction off any Bitcoin connected to this more recent Bitcoin seizure. "We haven't received any information on that," she said, explaining that any USMS action would require a court order like that one in January that gave the government permission to auction off Bitcoin seized in the first Silk Road case.
