Get Your Bitcoins at This Upcoming Civil Forfeiture Auction

Future Tense
The Citizen's Guide to the Future
Jan. 17 2014 6:10 PM

Get Your Bitcoins at This Upcoming Civil Forfeiture Auction

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Bitcoins are going up for auction.

Photo by George Frey/Getty Images

Instead of the usual sexy cars, speed boats, and designer handbags, an upcoming civil forfeiture auction might be selling off something you haven’t seen in a Martin Scorsese film: the cryptocurrency Bitcoin.

United States District Judge J. Paul Oetken signed off on Wednesday on the forfeiture of 29,655 Bitcoins seized by the FBI from the server of the Silk Road. Available only on the anonymizing Tor network, the online marketplace, where people traded in illegal items such as drugs and firearms, was busted last year and the website closed down. It was a lucrative haul for the Feds: Those pieces of virtual gold are now worth approximately $28 million as of yesterday, up from $3.5 million when they were first seized.

The U.S. government hasn’t quite figured out whether to treat the cryptocurrency as a commodity, a currency, or something entirely new. So it’s notable that Preet Bharara, the U.S. attorney for the Southern District of New York, did not consider Bitcoins to be an illegal asset. Bharara said in a statement: “These Bitcoins were forfeited not because they are Bitcoins, but because they were, as the court found, the proceeds of crimes.”

Given that the U.S. Treasury does not yet accept Bitcoin, how will the FBI get this payout into government coffers?  Jim Margolin, Manhattan U.S. Attorney Office spokesperson, told Kashmir Hill of Forbes, “We have not yet determined exactly how the Bitcoins will be converted and liquidated.” Hill speculated that the FBI would publically auction off the Bitcoins like it does most other criminal proceeds, especially given there’s no Bitcoin exchange in America that deals with this volume of the cryptocurrency.

The Feds are also trying to get their hands on an additional 144,336 Bitcoins (currently worth more than $130 million) that were found on computer hardware belonging to the alleged head honcho of the Silk Road, Ross William Ulbricht, aka “Dread Pirate Roberts.”  After being arrested in the Glen Park branch of the San Francisco Public Library, the libertarian faces  conspiracy charges of narcotics trafficking, computer hacking, and money laundering. He and his lawyers are fighting the allegations and the civil forfeiture claim.

Future Tense is a partnership of SlateNew America, and Arizona State University.

Ariel Bogle, a contributor to Future Tense, is an associate editor at New America.

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