The U.S. Marshals Service is conducting a bitcoin auction on March 5.
The auction registration process has been open to prospective bidders since February 17, but will close March 2.
“Bitcoins are an online virtual currency that has lost roughly 80 percent of its value since its peak closing high of $1,147.25 on Dec. 4, 2013, according to the digital currency news website CoinDesk.
The volatility results in part from bitcoin’s lack of central oversight and small trading volume (Reuters).”
The bitcoin being auctioned comes from the search and seizure of computer hardware belonging to the mastermind of an illegal marketplace called Silk Road.
Close to a month after Forbes’ Andy Greenberg wrote an article introducing the mastermind behind the site that brought Silk Road to the world, the site was shut down.
The man in question Ross William Ulbricht, better known as the Dread Pirate Roberts, was tried on February 4 and convicted of charges from money laundering to drug trafficking.
Silk Road is just one such site that was created after bitcoins were produced, and competition from other illegal sites forced the Dread Pirate Roberts to be a little less private.
That lust for money and eventual notoriety was Ulbricht’s downfall.
Bitcoin is an unregulated, non-centralized digital currency that is currently passing through the web with a value of 1 billion dollars.
Since the currency is not centralized it allows users the anonymity of never linking their personal information to their bitcoin wallet files.
The black market site and others like it use an intricate software called The Onion Router, or TOR, that bounces information through a series of thousands of computers and from there IP addresses cannot be traced.
It made Silk Road the eBay (NASDAQ:EBAY) of drugs.
Greenberg wrote, “In the last two and a half years Silk Road has grown into the Web’s busiest bazaar for heroin, methamphetamines, crack, cocaine, LSD, ecstasy and enough strains of marijuana to put an Amsterdam coffee shop to shame (Forbes).”
The site started with a monthly gross of about 1.2 million dollars, and then it exploded and has been recorded at between 30 million and 45 million annually in sales.
In total the Dread Pirate Roberts is responsible for the exchange of over 200 million dollars in sales between the sites conception and its end in October 2013.
Ross Ulbricht is facing life in prison, and has agreed to the sale of his 144,000 bitcoins, which in 2013 were worth approximately 28.5 million dollars.
He admits to creating Silk Road, but that he was not a part of the activities that took place.
If he chooses to appeal and wins, he will receive all of the money in cash.
If not, the cash exchanged for the bitcoins will be added to the Department of Justice’s asset forfeiture fund.
The U.S. Marshals Service has been the proctor for all the auction events behind Ulbricht’s bitcoin seizure.
In the first auction venture capitalist Tim Draper won 30,000 bitcoins, then worth roughly 19 million dollars.
The next auction was largely won by the Bitcoin Investment Trust, to the tune of 48,000 of the total 50,000 being auctioned at that time.
And the current auction will also have 50,000 bitcoins, through ten sets of 2,000 bitcoins and ten sets of 3,000 bitcoins.
The auction is currently worth 12 million dollars.
A version of this article appeared in the Tuesday, Feb. 24th print edition.
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