ANNOUNCEMENT: Since the Silk Road 2.0 bust by the feds a few other Darknet Markets have fallen. Silk Road 3 is up and running with a big selection of goods.
The US government on Thursday, 5th November 2015 held its final auction of bitcoins which were confiscated during the prosecution of Ross William Ulbricht, a Penn State graduate who authorities say created and run Silk Road. Before it was shut down in October 2013, Silk Road operated for over 2 years, generating more than $214 million in sales of drugs and other illegal goods using bitcoins.
The United States Marshals Service (USMS) said the 6 hour online auction it held on Thursday from 8am to 2pm EST for approximately 44,341 bitcoins worth over $17.2 million, drew eleven registered bidders who submitted a total of thirty bids on twenty two blocks of the bitcoins during the auction. Twenty one of the blocks were for 2,000 bitcoins, while the final block included 2,341 bitcoins. Participation was once again down sharply from the 1st auction of approximately 30,000 bitcoins, where forty five registered bidders placed sixty three bids.
The billionaire venture capitalist and founder of Draper University, Tim Draper, who was successful in 2 prior bitcoin sales, indicated that he wasn’t participating in the fourth auction. It was earlier speculated that Genesis Trading, a subsidiary of the Digital Currency Group, which is run by Barry Silbert and another bitcoin hedge fund known as Binary Financial will participate in this auction. According to Lynzey Donahue, a US Marshals Service spokeswoman, no further details will be released until all the bitcoins have been transferred to the winners.
Although the Silk Road crackdown was part of a joint-operation between the US Secret Service and the United States FBI, it was the USMS which was given the charge of handling the confiscated goods from Silk Road that was mostly bitcoins. Approximately 174,000 bitcoins were seized from the Silk Road. The US Marshals Service had previously held a total of 3 auctions where most of the Silk Road bitcoins were sold to qualified members of the US public.
The first auction which was held in June 2014 had 30,000 bitcoins on sale and attracted forty five bidders who made sixty three bids. The first portion of the bitcoins was won by Tim Draper.
The second auction which was held in December 2014 had 50,000 bitcoins on sale but it recorded a lower-turnout when compared to the 1st auction. It had only eleven bidders who made twenty seven bids. Most of the second auction’s bitcoins were purchased by the Bitcoin Investment -Trust bidding syndicate, leaving Tim Draper with the only remaining 2,000 bitcoins.
The third auction which was held in March 2015 2014 had another 50,000 bitcoins that were sold to the highest bidder. In spite of the fact that there were fourteen bidders who competed for the Silk Road bitcoins in the third auction, almost 47,000 or 94 percent of the bitcoins were purchased by Cumberland Mining. ItBit exchange was able to secure 1 block of 3,000 bitcoins.
The fourth auction came amid a surge in the price of the virtual currency, with the price of one bitcoin hitting $500 on Wednesday 4th November 2015 for the first time since August 2014. The price later fell, and by late Thursday, 5th November 2015, one bitcoin was worth $388, according to the Bitstamp exchange.
The bitcoins that were sold in the fourth auction were the last remaining in custody in connection with the federal prosecution of Ross William Ulbricht alleged by the FBI to be the owner and founder of Silk Road and the person behind the pseudonym “Dread Pirate Roberts.” In October 2013, Ross Ulbricht was arrested by the United States authorities. In total, 144,000 bitcoins were seized from Ulbricht’s laptop. Additionally, 29,655 bitcoins were held in wallets on the Silk Road at the time it was shut down. Hence, the total amount of bitcoins that were seized during the Silk Road crackdown is around 174,000 bitcoins. On 27th January, 2015, Ross William Ulbricht and the US government agreed to the sale of the seized bitcoins during his trial. According to the agreement, Ross allowed the US to sell all or any portion of the seized bitcoins. Additionally, the manner of the sale of the bitcoins was left to be determined by the US government. Ross was sentenced to life-imprisonment of twenty years without the possibility of parole on 29th May 2015. He’s jailed in the Metropolitan Detention Center, Brooklyn. Ross Ulbricht has also been ordered to a civil-asset forfeiture of over $183 million.