SecondMarket Among Bidders in Third Silk Road Bitcoin AuctionOlga Kharif
SecondMarket Inc. said it participated in the U.S. government’s third bitcoin auction to dispose of virtual currency seized by authorities when the illicit Silk Road online marketplace was shut down in 2013.
Some 14 participants submitted 34 bids for the 50,000 bitcoins up for sale on Thursday, according to the U.S. Marshals Service. Bitcoins will be transferred to winner or winners on Monday at the earliest, the agency said.
Interest in the digital currency remains healthy even though bitcoin prices have declined about 28 percent since the previous auction on Dec. 4, and are less than half of their value from a year earlier, according to the CoinDesk Bitcoin Price Index, an average of bitcoin prices across leading global exchanges. Increased regulatory scrutiny and closures of some bitcoin businesses are weighing on prices, as are the auctions, according to Gil Luria, an analyst at Wedbush Securities Inc.
“The steady stream of supply provided by the U.S. Marshals auctions is likely causing some pressure on bitcoin prices because they are coming on top of the existing supply from miners,” Luria said. “Once all the auctions are complete I would expect that overhang to lead to some price increases.”
Silicon Valley investor Tim Draper and online financial exchange SecondMarket won the 80,000 bitcoins auctioned off by the agency last year. SecondMarket’s trading division participated in today’s auction and bid for every block, according to Managing Director Brendan O’Connor. Draper said he didn’t participate in the bidding.
The government has 44,341 bitcoins left to sell after today’s auction, according to Lynzey Donahue, a spokeswoman for the U.S. Marshals.
“We anticipate selling them in the coming months,” Donahue said. “No exact dates have been determined.”
The auction is part of a cache of bitcoins seized by the FBI when it shut down Silk Road. Ross Ulbricht was convicted last month for running the online bazaar where anonymous users allegedly bought and sold heroin, LSD, phony passports and computer-hacking services. Ulbricht, who is facing life in prison, is scheduled to be sentenced May 15.