The US government is auctioning off some of the Bitcoins it seized from the illegal Silk Road operations. This isn’t the first time the US government is selling off its shiny Bitcoins in an auction. The first batch of Bitcoins that the US government sold at auction was around 30 000 Bitcoins. That auction, which was held in June, lured in 45 bids. A great number seeing how you needed a lot of cash to get in on the bidding.
This shows us that Bitcoin is still alive and well. It is also an indicator that the interest in this digital currency is only growing. Now let switch to today’s auctions. The second “silk road Bitcoin auction” will hold around 50 000 Bitcoins in total. According to the US marshals’ government website, that huge amount will be divided. “This sealed bid auction is for 50,000 Bitcoins separated into two series: Series A (10 blocks of 2,000 Bitcoins), and Series B (10 blocks of 3,000 Bitcoins). You will not have the opportunity to view other bids”.
According to some “insiders”, there have been 11 confirmed bids. We find that statement a bit strange because on the US Marshals government website it says: “You will not have the opportunity to view other bids”. So the question is where do these “insiders” get their information from?
Let’s just say for the sake of argument that the “insiders” are correct. What do these bidders mean for Bitcoin and the popularity of BTC? Some might say that this is just an indicator on the waning interest of Bitcoin in general. However these people tend to ignore the difference in volume. In this auction nearly the double amount of Bitcoin is offered. This will result that people need to put more money on the table if they want the Bitcoins. It is only logical that, so far at least, the bidders are less than the previous action.
Furthermore we need to look a bit closer to the EVIDENCE and not go on the “hear-say” of so called or self-proclaimed ”insiders”. What does the US Marshals’ government website say about the auction? There are 3 phases. The first one is a registration phase, which ran from November 17th 2014-1 December 2014.
“All interested parties must first register with the USMS. You are not eligible to submit a bid or otherwise participate in this auction unless you have submitted all required documents and have received confirmation from the USMS that you are an eligible bidder. Any registration documents received after the deadline will not be considered. Registration documents that were submitted in prior USMS auctions are not valid for this auction. You must submit new registration documents to be considered for this auction.
If the USMS determines that you are an eligible bidder, you will receive communication of that fact from the USMS and will be provided with additional information regarding how to place your bid by 5:00pm EST on Tuesday, December 2, 2014. If the USMS determines that you are not an eligible bidder, you will receive communication of that fact from the USMS, the deposit funds will be returned, and you will not be eligible to participate in the online auction.
The deposit of the winning bidder will be retained by USMS and credited towards the purchase price. If the winning bidder fails to close on the transaction through no fault of the USMS, the winning bidder will irrevocably forfeit his/her/its deposit to the USMS. The deposit of any bidder whose bid is not selected as a winning bid will be returned by ACH transfer to the original account from which the deposit was received. We will begin processing return of deposits immediately following the close of the Bitcoin transaction(s). We hope to process all returns within five (5) business days, but high participation may result in slightly longer return times.
Now the second phase is the actual auction. The auction starts at 4th December 2014 and will begin at 8a.m till 2p.m. This is how the US marshals’ website stipulates the auction:
“Eligible registered bidders will receive a Bid Form upon the close of the registration period. Only eligible registered bidders may participate in the online auction.
In order for your bid to be considered by the USMS, you must send a signed pdf copy of the Bid Form within the online auction period window, which extends from 8:00am EST until 2:00pm EST on Thursday, December 4, 2014. Bids received before or after the online auction period will not be considered. Bids that do not conform to the following instructions will not be considered.
You must use the Bid Form that will be provided to eligible registered bidders only. You may not submit bids on Series for which you did not register.
Your bid must reflect the number of blocks (up to a maximum of 10 blocks) that you wish to purchase. A bid on more than one block from a Series means that the bidder will accept any number of blocks up to the number of blocks for which he/she/it bid (e.g. a bid to purchase 5 blocks means that bidder will accept 1, 2, 3, 4 or 5 blocks at the per block offer price).
The prevailing bids will be determined by the following criteria:
1. The eligible bidder who offers the highest price will be the prevailing bidder;
2. If there are multiple bids at the highest price, the first bid received will prevail;
3. If fewer than all of the blocks in a Series are sold to the highest bidder, the remaining blocks will be sold to the successive highest bidders until all blocks are sold.
The Third and last phase will be for the people who won at the auction and what is expected of them.
“On Friday, December 5, by 5:00pm EST, the USMS will notify the winning bidder/bidders that their bid/bids has/have been selected. Any winning bidder must send the purchase price funds (less the deposit amount) by a wire transfer originating from a bank located within the United States and provide a wire transmittal receipt to the USMS by 2:00pm EST, on Monday, December 8, 2014. It is the responsibility of the winning bidder to understand their bank’s deadline for initiating wire transfers in order to ensure that the domestic wire transfer is initiated and a wire transmittal receipt provided to the USMS by the deadline. Failure to provide the USMS with a copy of the wire transmittal receipt by the deadline will result in disqualification, forfeiture of the deposit, and award to another bidder.
Bitcoins will be transferred to winning bidders in the order that each winning bid was received. No Bitcoin transfer will be made until the USMS has confirmed receipt of all purchase funds. The Bitcoin transfer process will begin immediately following receipt of purchase funds. The winning bidder(s) will be given private instructions related to the transferring of the Bitcoins”.
· Cash. The bid must be an all cash offer. Bids that are contingent on financing terms of any kind will not be considered. All bids must be made in U.S. dollars.
· Receipt of Funds. The winning bidder should be prepared to wire purchase funds to the USMS by 2:00pm EST on Monday, December 8, 2014. If the winning bidder does not provide the USMS with a copy of the wire transmittal receipt by this date, the bidder will be disqualified and another winning bidder will be selected. FAILURE TO INITIATE A WIRE TRANSFER AND PROVIDE THE USMS WITH A COPY OF THE WIRE TRANSMITTAL RECEIPT BY MONDAY, DECEMBER 8, 2014, AT 2:00pm EST WILL RESULT IN FORFEITURE OF THE BIDDER’S DEPOSIT. The winning bidder is responsible for any wire transfer fees associated with his or her payment.
· Transfer Fees. Any transfer fees associated with the transfer of the Bitcoins will be paid by the buyer. The buyer will be given an opportunity to select the amount of fees charged in the transfer.
· Block Transactions. The USMS will only sell the Bitcoins in blocks as described above. No bitcoin transfer will be made until the USMS has confirmed receipt of all purchase funds from the buyer. The USMS will not transfer Bitcoins to an obscene public address, a public address apparently in a country restricted by the Office of Foreign Assets Control (OFAC), a public address apparently associated with terrorism, other criminal activities, or otherwise hostile to the United States.
· Bidder Qualification. The USMS reserves the right to reject any bid for any reason whatsoever. The USMS reserves the right to sell all, some or none of the Bitcoins at auction.
· Bill of Sale. The winning bidder will receive a signed Bill of Sale from the United States Marshals Service prior to the transfer of the Bitcoins.
As you can see the US Marshals made good work of the legal system to get a much needed money injection. So why did we put some parts of the US marshal’s auction modus operandi in this article? Well first to inform you with FACTS and second to point out some flaws in certain “news reports”.
One of these “unlikely claims” is the one that “only 11 bidders” were active at the auction. This rumour appeared at the exact time the auction ended. The probability that the “insider” was one of the bidders themselves can be dismissed by pointing to the guidelines of the auction.
This is further substantiated as “unlikely” by the fact that the winners will only be contacted on the 5th of December. So yes we believe this claim of “only 11 bidders were active in the auction” is more likely to be a fabrication of someone’s overactive imaginations.
The question in everyone’s mind is: what will this mean for the BTC price in the short term? If the previous auction will be any indication the BTC price will, in all likelihood, drop again. Now mind you this can also not be the case. If said people who bought the BTC’s at auction have put down a lot of money. This could mean that these people tend to invest that amount into Bitcoin companies and projects.
It is also possible that some of them want to create a start-up which is solely Bitcoin funded. In the long run this could mean more jobs and a more diverse Bitcoin climate. We could speculate for hours on the “what if’s” but we will close with only one hypothetical example.
What if the buyers are certain banks who want to experiment with Bitcoin or, more likely people affiliated to certain banks that act on behalf of banks? We see evidence of the bank’s interest in Bitcoin for a couple of years now.
We at CryptoArticles do have a lot of connections with people inside and outside the financial system who have hinted on such a move in the past and in our numerous interviews we did with them. So maybe this is the case with this auction. Regardless of who bought the Bitcoins and what their intent is with their newly acquired shiny BTC’s, time will only tell.