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Summary:

A leaked list suggests some familiar names will participate in an upcoming bitcoin auction by the US government. This raises the question of why people would participate in a currency auction in the first place.

An administrative blunder by the U.S. Marshals service has revealed the names of more than a dozen people who expressed interest in an unusual upcoming auction for about 30,000 bitcoins seized last year from the illegal online drug marketplace Silk Road.

As Coin Desk reports, the names were leaked when the Marshals service sent a bulk reply about the auction process, but “cc’d” rather than “bcc’d” the recipients — revealing some familiar names in the process.

These include Fred Ehrsam of Coinbase and Barry Silbert of Second Market, both of whom head prominent bitcoin companies and are believed to own large quantities of the virtual currency themselves.

The list also includes other individuals tied to existing bitcoin businesses and, interestingly, names from the investment banking world. These include a person who works in quantitative arbitrage at BNP Paribas, as well as someone from hedge fund manager Matrix Capital Management. A Yelp executive is also on the list.

All this raises the question of why someone would bid in a bitcoin auction. After all, bitcoins are both fungible and already traded in currency markets so, in theory, the auction price should turn out to be the same as the prevailing market rate that day — it would be like going to an auction to buy euros or yen, where the price will be nearly the same as at the bank.

Unless, that is, a lack of liquidity or some other problem in the market means that current bitcoin prices are artificially high. If that’s the case, the bidders have two possible motivations. One, they are looking for a bargain on bitcoins; or two, they fear for the value of their existing bitcoin stash and want to bid up the price at the auction until it mirrors the market price.

We will find out more on June 27 when the Marshals Service will sell blocks of 3,000 bitcoins during a 12-hour auction. The service may conduct a further auction later this year to divest the 144,342 bitcoins the FBI seized from Silk Road’s alleged mastermind, Dread Pirate Roberts.

Finally, keep in mind that some of the people named on the leaked list may simply be interested in the auction process itself — though, realistically, if you’re inquiring about a bitcoin auction in the first place, it’s a good bet you’re interested in buying bitcoin.

  1. It’s one L in Marshall, please. For example:
    http://www.justice.gov/marshals/

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    1. You’re right, thanks for flagging!

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  2. I wonder if the auction house will accept Bitcoin as payment? Haha

    It does seem a bit strange. I guess US law must dictate that confiscated property must go to auction or something otherwise the feds would just cash them for the market value rather than putting on an auction.
    Personally, I’d say the BEST way to auction them is if all bids are secret and the highest bid wins.

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