Bitcoin Trust Wins 48,000 Silk Road Bitcoins Auctioned by US Marshals

Bitcoin Trust Wins 48,000 Silk Road Bitcoins Auctioned by US Marshals
Bitcoin Investment Trust, an investment fund focused on the digital currency for high net-worth individuals, has won the bidding for 48,000 Bitcoins auctioned last Thursday, Brendan O'Connor, managing director of the SecondMarket exchange, said on Tuesday.

The U.S. Marshals Service auctioned 50,000 Bitcoins last week seized from the alleged owner of Silk Road, an Internet black-market bazaar where authorities say drugs and other illegal goods could be bought.

O'Connor said the Bitcoin Trust bid was done in conjunction with the trading division of SecondMarket, an exchange for Bitcoins launched by Barry Silbert. He declined to disclose details of the bid or the members of the SecondMarket syndicate.

Lynzey Donahue, a Marshals Service spokeswoman, confirmed in an email that the Bitcoin Trust syndicate won the 48,000 Bitcoins, adding that the transfer of the funds was completed on Monday.

The remaining 2,000 Bitcoins went to venture capitalist Tim Draper, the venture capitalist said last Friday in an emailed statement to Reuters. Donahue declined to confirm this.

Draper said he successfully bid on one lot on behalf of Draper Associates.

Draper also declined to disclose the price he paid.

The move helps fulfill his plan to invest 300 Bitcoins in every business that participates in Boost, a program for Bitcoin-related startups founded by his son, Adam Draper.

Last week's second auction of Bitcoins by the U.S. Marshals showed a drastic decline in bidders from the first sale in June. The first auction attracted 45 bidders, with 63 bids, while the December sale showed just 11 buyers and 27 bids, according to the Marshals Service office.

Bitcoin on Tuesday was down 2 percent at $352.24. It rose to a high of more than $1,000 in December last year, but has lost more than 50 percent of its value so far in 2014.

The digital currency's volatility, a consequence of its decentralized nature and its small trading volume, has been a major obstacle to its growth.

"A lot of people are underwater in their Bitcoin positions this year," said George Samman, chief operating officer, at, a Bitcoin derivatives trading platform.

"The Bitcoin story is not as hot as it used to be. The whole ecosystem is growing by leaps and bounds and Bitcoin is being accepted more widely, but the price keeps going down. To consumers in general, price matters."

© Thomson Reuters 2014

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