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January 21st, 2014 at 2:42 pm

Feds are free to sell seized Silk Road bitcoins worth $25 million

Tibanne CEO Mark Karpeles At Mt.Gox Bitcoin Exchange And Bitcoin Images

The U.S. Marshals will likely auction off the Bitcoins.

The online drug bazaar, Silk Road, was taken down this past October by the feds.  Nearly, 30,000 bitcoins in Silk Road’s coffers was seized in the process.  Last week, the Manhattan U.S. Attorney’s office, which is prosecuting the Silk Road case, announced that a judge had signed off on a forfeiture order for those coins. That means they’re now free to get rid of the 29,655 bitcoins, worth about $25 million at Bitcoin’s current $850 value.

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“We have not yet determined exactly how the Bitcoins will be converted and liquidated,” said Manhattan U.S. Attorney Office spokesperson Jim Margolin.

There is no legally certified U.S. Bitcoin exchange, and I doubt the feds want to sell the coins via Mt. Gox, which got in legal trouble last year for operating in the U.S. without a license, or via BTC-e, the mysterious exchange based in Bulgaria. It’s likely that the U.S. Marshals will instead auction off the Bitcoins as if they were Bernie Madoff’s penthouse or a drug dealer’s cars. When the FBI first seized the coins in October, they were worth about $6 million; they’re now worth four times that. This is a bust that keeps on paying off. The proceeds will go to the U.S. Treasury.[...]

“Ulbricht has filed a claim in the civil forfeiture action, asserting that he is the owner of the Bitcoins found on his computer hardware, and contesting the forfeiture of those Bitcoins,” notes the Manhattan U.S. Attorney’s press release. Ulbricht is facing drug, computer hacking and money laundering conspiracy charges; he claims that he is not the creator of the Silk Road, but that the over $100 million worth of Bitcoin found on his computer does belong to him.

Manhattan U.S. Attorney Preet Bharara made clear in the release that the Bitcoin themselves are totally above board, legally speaking. “These Bitcoins were forfeited not because they are Bitcoins, but because they were, as the court found, the proceeds of crimes,” he says in the release. Any Silk Road users who had legitimate holdings on the site are out of luck. All Silk Road assets are forfeited because they were “being used to facilitate money laundering,” per the order from U.S. District Judge J. Paul Oetken

Spokesperson Jim Margolin could not say exactly when the Bitcoin would go up for sale, but the approximately $25 million worth of Bitcoin will be auctioned off soon. This should be interesting.

Photo credit: Wired

Via Forbes

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