For Sale: 50,000 Bitcoins

http://www.usmarshals.gov/assets/2014/dpr-bitcoins/

by martinko • 12 years ago

273 135 12 years ago

zwtaylor• 12 years ago

I don't have a deep grasp of Civil Forfeiture but it seems like this is unusual considering DPR has not been convicted of anything yet. Is this part of a plea bargin or something similar?

mmanfrin• 12 years ago

http://en.wikipedia.org/wiki/Civil_forfeiture_in_the_United_...

emhart• 12 years ago

from the link, and their all caps treatment preserved:

ON JANUARY 27, 2014, THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK ENTERED A STIPULATION AND ORDER FOR INTERLOCUTORY SALE OF BITCOINS WHEREIN THE UNITED STATES AND ROSS WILLIAM ULBRICHT AGREED THAT THE UNITED STATES MAY SELL ANY PORTION OR ALL OF THE COMPUTER HARDWARE BITCOINS ON A DATE OR DATES IN A MANNER TO BE DETERMINED BY THE GOVERNMENT.

So, it sounds like he clearly agreed to something, as he is mentioned by name here.

rrggrr• 12 years ago

The "Computer Hardware Bitcoins" term is notable and I wonder to which statute it refers. What actions were taken or crime alleged where it would be important to characterize Bitcoins in this way?

I speculate that Ulbrict needs funds to pay attorneys fees. It may be he stipulated to a portion (or all) of the BTC as his in-exchange for unfreezing the asset and permitting its sale.

waterlesscloud4• 12 years ago

It's amusing to see the url uses "dpr-bitcoins", DPR being the common community abbreviation for Dread Pirate Roberts. I mean, that's what they are, just funny to see the govt refer to him that way.

http://www.usmarshals.gov/assets/2014/dpr-bitcoins/

tedunangst4• 12 years ago

It is clearly in Ross's interests to permit the sale. He's not DPR, remember? So these aren't his bitcoins and he therefore doesn't care what happens to them.

ncallaway• 12 years ago

Civil forfeiture is different from criminal forfeiture in that it does _not_ require a guilty verdict. Civil forfeiture is against the _property_, and it puts the burden of proof on the owner of the property to prove that it was obtained legally.

Here's another explanation of it that's probably better than mine: https://www.contributoria.com/issue/2014-08/539b517ba588a791...

eyeareque• 12 years ago

So what happens if he legally obtained these bitcoins, but cannot prove that he did so?

So he basically loses them before he even can prove that they are his or not?

That doesn't seem right, it would make sense that the coins are held in an escrow status until he was proven guilty.. It seems to be a big loophole for the government to just go and steal whatever they want from you, before you've been proven guilty.

rhino369• 12 years ago

Technically, the burden is still on the state. However, the burden is much lower. The preponderance of evidence standard is used. That means if "more probable than not" that it was criminal proceeds the government wins.

tigerente• 12 years ago

Last Week Tonight with John Oliver has recently done a show summarizing the issue around Civil Forfeiture: http://www.youtube.com/watch?v=3kEpZWGgJks

x1798DE• 12 years ago

Civil asset forfeiture cases in the US, insanely, have a reversed burden of proof and are in re actions against the assets to be seized. When assets are seized by law enforcement, you have to petition for them to be returned and prove that you came by them lawfully. You don't ever need to be convicted of or even charged with a crime in order to have your assets seized.

I don't know anything about how long law enforcement has to wait before selling your assets.

schoen• 12 years ago

Should be in rem (against a thing) instead of in re (in a matter) in this case. The Latin preposition in can take the accusative case, in which case it means 'into, onto, against' or the ablative case, in which case it means 'in, inside of'.

ceejayoz• 12 years ago

Read this investigative series and become furious:

http://www.washingtonpost.com/sf/investigative/collection/st...

giodamelio• 12 years ago

My understanding is this. The government found a bunch of bitcoins on a computer that may or may not have belonged to Ross Ulbricht, so they asked him "Are all these bitcoins yours?". Ross can't say that they are without admitting his guilt, so the government auctions them off.

whyenot2• 12 years ago

Your understanding is wrong. From the order:

WHEREAS, on or about December 12, 2013, Ulbricht filed a timely verified claim in this proceeding, asserting an ownership interest in the Computer Hardware Bitcoins

whyenot2• 12 years ago

Everyone seems to be going off on a tangent about civil forfeiture. From the order: http://www.usmarshals.gov/assets/2014/dpr-bitcoins/order.pdf

WHEREAS, the Government and Ulbricht agree that, due to the volatile market for bitcoins, the Computer Hardware Bitcoins risk losing value during the pendency of the forfeiture proceedings;

WHEREAS, the Government and Ulbricht agree that the Computer Hardware Bitcoins are to be liquidated or sold by the Government before the conclusion of the forfeiture proceedings, with the net proceeds of the sale to be held as substitute res pending further order of this Court;

stronglikedan2• 12 years ago

So basically, put the current value of the coins in escrow, instead of the coins themselves, in case they drop in value dramatically over time. Makes sense to me.

paulsutter• 12 years ago

The IRS will go after him for capital gains tax after the sale. The document makes no mention of a provision for him to pay his taxes due from the proceeds of the sale.

dragonwriter3• 12 years ago

Its worth noting that while they have been seized, they have not yet been forfeited -- that action is ongoing. The sale was agreed to secure the value and protect the government and Ulbricht both from price volatility; the forfeiture action will continue against the sale proceeds.

downandout• 12 years ago

Civil forfeiture is one of the scariest areas of our legal system. The government essentially files a civil lawsuit against your property, and it then it's on you to get it back (the case titles are actually things like "USA vs. $25,000 US Currency"). This ability has created perverse consequences, such as turning police into nothing more than a band of highway robbers [1]. It's also used in drug cases, like DPR's, because it's far easier to obtain a civil judgment than a criminal one. He could be found not guilty on all counts, and still lose all of the money that this sale generates (he agreed to the sale of the coins in hopes of beating the civil forfeiture that will come later, but he has little chance of that).

[1] http://www.washingtonpost.com/opinions/tim-walberg-an-end-to...

fnordfnordfnord• 12 years ago

ij.org has some good info about civil asset forfeiture.

WRT DPR, I would guess that in order to have any chance to successfully challenge the forfeiture he d likely find it necessary to incriminate himself.

InclinedPlane• 12 years ago

Civil forfeiture does not require a criminal conviction of the owner of the property. Most importantly, in civil forfeiture it's not the owner who is on trial, it's the property. And unlike criminal law which works on the premise of presumption of innocence and requirements of proof of guilt "beyond reasonable doubt", asset forfeiture works based on civil law and the standard of "preponderance of evidence" (or a >50% probability of guilt).

Istof• 12 years ago

you don't need to be guilty of anything for being victim of civil forfeiture.. they create a lawsuit against your property and property is considered guilty until proven innocent, unlike people.

Aaronneyer• 12 years ago

Will be interesting to see how this announcement effects the price of bitcoins. I would imagine there will be an initial drop out of panic, but if we see some wealthy individuals with a vested interest in bitcoin buying these up, it could very much cause a large shift upwards in price.

lucb1e2• 12 years ago

Will be interesting to see how this announcement effects the price of bitcoins.

That's what people asked last time when, if I remember correctly, the FBI was selling off some of the Silk Road coins. Nothing really happened, maybe a few percent drop, but that happens every day so I'm not even sure that was due to the sell.

zeeshanm• 12 years ago

To add more context, a well-known investor who happens to have significant influence ended up buying those bitcoins.

martinko2• 12 years ago

Right after the news broke we saw a relatively high volume dump pushing the price down by about 8%, from 410 to 375. Curious to see where it will go now. To be honest I expected a larger dump after this kind of news..

bbcbasic• 12 years ago

Funny it should have barely any effect on the price, but if the news caused this drop it is probably because people sold anticipating that the news would cause this drop.

atmosx2• 12 years ago

I don't think so. You're assuming that BTC are somehow equally distributed :-) IMHO they are not ;-)

stockkid• 12 years ago

Would you care to elaborate?

jaxx456• 12 years ago

I wonder if the people who were interested in this kind of thing before would be interested in buying bulk bitcoin again. Seems like it's all free money.

kristianp• 12 years ago

If bitcoin exchanges were an efficient market, there should be no drop, because this sale has been anticipated, just not the exact date. However it isn't an efficient market.

dntrkv• 12 years ago

According to Coinbase, the current buy price for bitcoin is $385. 385 x 50,000 = $19.2MM

nkuttler3• 12 years ago

Coinbase doesn't have enough volume to sell you 50k coins right now, you would hike the price towards infinity. You could buy something like 22k coins for 24M.

xchaotic• 12 years ago

I'll keep an eye out for this. I think the final price will reach quite close to the market price with no guarantee of being able to sell at that price. Still might be worthwhile for someone to build up their position considerably without spooking the exchanges.

martinko2• 12 years ago

The question is, where will the market price be by the auction date? This news mean that a substantial amount of money that may have otherwise been used to buy BTC on the open market will now go towards this purchase.

dkyc• 12 years ago

Last time the US auctioned off bitcoins, the price was above market price [0]. A VC wanted to buy a large chunk of bitcoins for a company he invests in without driving up the price.

[0] http://www.bloomberg.com/news/2014-07-01/bitcoin-auction-end...

rebel3• 12 years ago

I don't see anywhere in your cited article that says the coins were purchased for more than market price. Can you point it out for me?

Additionally, if you were a rational investor who believed the coins were worth above market price, why would you not additionally buy up any coins on the market that were selling below that price? Ultimately, bidding up the market price to whatever the "above-market" bid was.

dustcoin• 12 years ago

Nothing in that article states that the coins were sold above market price. The only publicly known data points were some significantly below-market bids (<$500 when the market price was ~$600) that did not win.

jnardiello• 12 years ago

The world has gone insane.

adnam• 12 years ago

Oh, was there a trail and a guilty verdict I didn't hear about?

pimlottc• 12 years ago

How does this relate to the previous auction of approx. 30,000 seized bitcoins back in June?

http://www.coindesk.com/us-marshals-one-auction-bidder-claim...

gwern• 12 years ago

That was the sale of the Silk Road 1 server's bitcoins - the bitcoins SR1 users had actually in the site, either deposited because they intended to buy something, locked up in escrow as part of an in-flight order, or not yet withdrawn by a seller.

This is Ross Ulbricht's personal bitcoins on his laptop and backup drives.

lucb1e2• 12 years ago

For scale, this is not even a day's worth of normal transactions. Yesterday about 177000 BTC was sent across the network, and that wasn't a big day.

mrb• 12 years ago

A lot more than 177k BTC changed hands yesterday. You don't see it on the block chain because most of it is transacted off-chain: 788k BTC were sold and bought on Bitcoin exchanges in the last 24 hours - http://bitcoinity.org/markets/list?currency=ALL&span=24h So 50k BTC is really nothing (~6%) compared to what the market usually handles every day.

drzaiusapelord• 12 years ago

because most of it is transacted off-chain

Does this come with risk? Shouldn't all transactions be on the chain?

dwaltrip• 12 years ago

I wouldn't blindly trust the volume from the Chinese exchanges (over 80% percent of the entire volume). Some of them have zero fees, so you can essentially "sell" to yourself for free and generate fake volume.

patio112• 12 years ago

This calculation is complicated by Bitcoin's handling of change, where (by analogy) spending $10 from a bank account with $10,000 in it can very easily result in $800 "moving across the network" even though $790 is just bouncing around in the same bank account.

DickingAround2• 12 years ago

What's sad is that this was half the point of bitcoins; they can't be easily seized. I hope the other DPRs are smart enough to have a system which moves their coins before the gov breaks the encryption on the wallets they seize in person.

sneak3• 12 years ago

There are many DPR-related bitcoins that they were unable to access. Fear not.

This was not "half the point of bitcoins" - the intent of the bitcoin release is only hinted at by Satoshi. Any point you are asserting here is pure speculation.

However, if you think this is a valuable property, a so-called "brainwallet" provides exactly this safety. They've been around for ages. No moving of coins required.

DickingAround2• 12 years ago

Where there really coins they didn't get? Source? (Not to dispute the claim, just interested)

About it being half the point: Perhaps not stated explicitly, but he knew what he was doing by not baking in a government back door. From the whitepaper: "any two willing parties to transact directly with each other"

I'm probably not getting the joke, but are there people who memorize their secret keys? I've never looked to see how long they are but I assume that's quite a feat.

stronglikedan2• 12 years ago

I could see this with physical bitcoins, but the fact that these are virtual bitcoins is certainly worrisome.

pingec• 12 years ago

This guy calls it BS. Any thoughts?

http://trilema.com/2014/the-united-states-scammers-service-f...

wmf3• 12 years ago

It does seem odd that they don't release the name or price of the winning bid.

pmorici2• 12 years ago

Well the winner of the first auction came forward voluntarily so it isn't like it was a mystery.

pmorici2• 12 years ago

Looks like a crazy rant to me. This is the same process they used to sell a related stash of Bitcoin earlier this year. The winner of that auction was Tim Draper.

devindotcom• 12 years ago

Marshals say there are 94 thousand more where that came from so if you're still scraping together the 100 grand to join the bidding, you'll have a couple more chances.

Aqueous• 12 years ago

I wonder if they'll accept drugs?

softdev12• 12 years ago

It seems to me that the several bitcoin auctions by the US government aren't that bad a thing for the cryptocurrency movement. To me, it provides a headline story that's sure to raise awareness of bitcoin for the general public (something that is certainly needed). Plus, it brings out the major bitcoin buyers. It's the equivalent of Sotheby's or Christie's having an auction of Picassos or Warhols.

logician76• 12 years ago

It would be cool if bitcoins seized in one crime would be compensating bitcoins stolen in another crime: Mt.Gox ..

megablast• 12 years ago

It is not the governments role to replace the stuff that was stolen from you. That is what insurance is for.

NeutronBoy• 12 years ago

Especially Bitcoins, of which a key 'feature' is 'No Government Intervention required'.

sidhire• 12 years ago

How does a party go about determining a bid for something like this?

For Sale: 50,000 Bitcoins

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