US To Auction 29,656 Bitcoins Seized From Silk Road 232
ClownP writes with news that the U.S. Marshals Service is selling off 29,656.51306529 Bitcoins that were seized when the Silk Road website was shut down. At current exchange rates, they're worth around $17-18 million. The coins will be auctioned off in nine blocks of 3,000 coins, plus one block with the remainder.
The USMS said that the first deadline for bidders will be 9am Eastern Time on June 16, 2014. All bidders must complete the government's Bidder Registration Form, which requires that you provide a copy of a government-issued ID as well as a $200,000 deposit sent by wire transfer from an American bank. The government added that the highest bidder will win, and he or she cannot finance its payment in installments — the winner must pay the full amount in cash. The USMS added one final stipulation. "The USMS will not sell to any person who is acting on behalf of or in concert with the Silk Road and/or Ross William Ulbricht, and bidders will be required to so certify," the USMS stated.
Re:Initial Offer (Score:4, Insightful)
You should give two bit coins. This would drive the auctionators crazy.
Re:Initial Offer (Score:4, Insightful)
Not possible. You'll have to buy one block of 3000 bitcoins. ... Let's start out with 3000 bitcoins. There's 3000 bitcoin. Do I hear 3001 bitcoin? 3001 bitcoin? 3001 bitcoin? Do I hear 3001 bitcoin? Sold for 3000 bitcoin to the man in the funny hat.
Re:By using such large blocks (Score:4, Insightful)
It's an auction of property they seized. If the property value is expected to sell for more money than you have, you will not be the highest bidder. This is the way auctions (government and non government) have been for just about ever. This has nothing to do with the rich or poor. There is no incentive to split them into 29,000 individual items either. That would be a waste of time and money.
Re:I hope they get whatever they can for them (Score:5, Insightful)
No, it doesn't, actually, or at least not any more than it somehow makes cars, homes, or other items seized and auctioned off suddenly become money.
What would legitimize it would be if they kept them and used them as money to buy things. They aren't. They're getting rid of them and explicitly NOT treating them like money.
It's literally no different than if they'd seized any other thing that some people think is worth buying.
Re:I hope they get whatever they can for them (Score:5, Insightful)
Let me blow your mind right now: all currency is fake. That's what makes it currency instead of bartered goods.
Re:Laundering (Score:5, Insightful)
Even worse than laundering: the US government is ensuring that only the rich have access to these bitcoins sold at a reduced price.
The coins should be sold on the open market and the proceeds put in the same coffers as tax money to reduce that burden. Instead of doing that, they are ensuring that the wealthy can acquire more items of value that can then be directly liquefied.
Re:By using such large blocks (Score:5, Insightful)
Because that's not how the government works in this regard?
They take shit, they auction it off to the highest bidder. The government is not in the business of managing an inventory, they want to convert whatever they take into cash as fast and efficiently as possible.
They think 3000 coin lots is the most efficient way for them to sell them, and couldn't give a shit as to who buys them as long as they pass the vetting process.
Re:Laundering (Score:3, Insightful)
Which "open market" should the government use? What system should they use to manage the sail of those coins? How should they ensure that the market they use is legit and secure? What process should they use to ensure that the Silk Road guys aren't just re-buying their stuff? Who will handle oversight to make sure this all goes off accordingly?
Pretty much answering any one of those questions would be a process that costs far more than the estimated value of the bitcoin they have.
Far better for them to use their existing process of auctioning off random shit they seize.
Also, the government couldn't care less if you can't afford to buy the stuff they auction off.
Re:Initial Offer (Score:5, Insightful)
That sounds fair and Democratic first rattle out of the box.
Re:Initial Offer (Score:2, Insightful)
You're a few decades too late on that one, the requirement to put up surety money to show you're not wasting the auctioneer's time is a long-established practice that arose because of more than a few spoilers who had no real intention of fulfilling their obligations and were effectively....damn, the word for it is on the tip of my tongue. You know, when you don't have the assets for anybody to make a claim on you regardless.
Re:I hope they get whatever they can for them (Score:5, Insightful)
You're very confused.
Being able to pay for something with legal tender (US dollars) does not somehow make the things you buy with legal tender into legal tender itself. Nor does it somehow turn it into a currency. It sets no precedent.
Selling bitcoin - or ANYTHING ELSE - at an auction in exchange for US dollars does not set ANY kind of precedent establishing that bitcoin - or ANYTHING ELSE - is now legal tender. In fact, it establishes the opposite.
What WOULD set a precedent is if the government called up some suppliers and gave them bitcoin directly in exchange for things that aren't legal tender, because then they would be saying that bitcoin is the same as US dollars.
What they are doing here is saying "we have these bitcoins (and other things) and we would rather have US dollars, which are legal tender. We will give you these bitcoins for dollars, which we will then go and use like real money."
This isn't difficult.
Re:Do they accept (Score:3, Insightful)
<sarcasm>
When the government does something, it's not illegal.
</sarcasm>
Re:Initial Offer (Score:4, Insightful)
The problem is not putting up surety money, the problem is auctioning off the assets in blocks so large that only very wealthy people or institutional investors can participate. That's what's antidemocratic about it.
Re:I hope they get whatever they can for them (Score:4, Insightful)
If the government sold US dollars for bitcoin, I would say that sets a precedent that they are treating bitcoin like legal tender. A weak precedent, since the argument could be made that they "sell" US dollars for fighter jets, and yet fighter jets are not legal tender.
If the government accepted bitcoin for other things they offer, I would say that sets a precedent that they are treating bitcoins like legal tender. That would be a much stronger precedent.
If the government purchased things with bitcoin directly - as in used it to settle debts - then that would be the strongest possible precedent (short of them flat out saying "bitcoin is now legal tender") that they are treating bitcoin as legal tender.
The government is not treating bitcoins like they treat legal tender, not in any way, shape or form. I know you're probably just being silly with the "buy bitcoin with bitcoin" line, but there are - as I pointed out above - ways that you could establish a precedent that don't involve sophistry.
Re:I hope they get whatever they can for them (Score:5, Insightful)
Let me blow your mind right now: all currency is fake. That's what makes it currency instead of bartered goods.
This. Times a million
Every currency (Yes, Virginia, even gold-standard currencies) are completely fake and arbitrary. The difference between fake and arbitrary fiat currency and fake and arbitrary gold-standard currency is exactly one layer of abstraction, because the "value" of gold is in itself pretty arbitrary. It is somewhat rare, but it's "value" is completely generated by the human mind. Which is actually for the best--can you imagine how high the price of gold would be if it was actually useful for something besides making jewelry and helping Fox News scam old people out of their savings with terrible gold investment opportunities?
Humans assigned "value" to gold because it was rare-enough to avoid hyper-inflation, but common enough that you didn't have to worry about deflation. And that worked just fine for a few tens of thousands of years... until there were too many humans for the world supply of gold to adequately represent new wealth and value as they're created.
If a more numerous race of aliens had evolved on this planet they might have assigned value to blades of grass, pebbles, or certain kinds of trees in a similar matter based on their own needs.
Which is why the entire "gold standard" argument (that "our money is fake and worthless") is so stupid: Yes, it is fake and worthless. So is all other money, everywhere--the value comes from the perception. So it doesn't matter if its "backed by gold" or "backed by Jell-O Pudding pops" the fact is, the value is based totally on the perception of value of something. With fiat currency, it's the perception of the value of what you can buy, with "gold-standard" currency it's the perception of the value of the gold. But neither has any "real" value without that perception.