Usual Suspects Return to Bid in Latest US Marshals Bitcoin Auction

A second planned auction of 50,000 bitcoins seized by the US government from alleged Silk Road mastermind Ross Ulbricht is attracting many of the same bidders who participated in the June sale of roughly 30,000 BTC taken from the illicit website itself.

Many of the more notable participants from the first auction, including Binary Financial, Bitcoin Investment Trust, Bitcoins Reserve, Mirror (formerly Vaurum), Pantera Capital and angel investor Tim Draper will be taking part once again in the 4th December event.

Although bidders admit that this auction is likely to receive less media attention, many firms are still looking to engage in the event for strategic purposes. The development suggests that interest in bitcoin as an investment opportunity remains high, even as auctions become less advantageous for participants given bitcoin’s maturing market.

Harry Yeh, managing partner at bitcoin-focused investment firm Binary Financial, indicated that interest from his customer base is not as strong as it was this summer.

Yeh told CoinDesk:

“I think since it’s been announced, a lot of people lost interest. People are bidding, but people also realize there are other blocks going on sale.”

As suggested by Yeh, the 50,000 BTC to be offered at auction represents just a portion of the 144,000 BTC originally confiscated from Ulbricht. The USMS has confirmed it will sell the remaining 94,000 BTC in coming months, though no dates have been set.

The money the USMS receives from the auction is still the subject of ongoing litigation, as Ulbricht has previously filed a claim to his holdings, which he alleges he obtained through lawful conduct.

Differing market motives

Yeh went on to note that it’s increasingly possible for high net-worth investors to accumulate blocks of 5,000–20,000 BTC over time, potentially avoiding the premium that can come with buying bitcoin in a competitive bidding process, and through subsequent auctions.

Both factors, he suggested, have dampened investor enthusiasm.

"You don’t want to be paying a huge premium just to get bitcoins," Yeh explained. "Some people will, but for us, we’re looking to get it at a fair price."

Mirror CEO Avish Bhama, whose company will use the roughly 30,000 BTC purchased by its investor Tim Draper in the previous auction, told CoinDesk that while it was seeking to gain the ability to offer customers liquidity in the first auction, it is now participating on behalf of its clients.

“For this upcoming syndicate, we're simply making it easy for institutional clients to bid on the coins in a safe and secure way,” Bhama said, adding that Draper will be participating in Mirror’s syndicate.

Public announcements

A small number of participants from the first auction have been more vocal about their involvement in the second auction.

Venture capitalist and serial bitcoin investor Tim Draper told Bloomberg that he intends to bid in the auction, citing the potential for bitcoin as a disruptive technology and the current attractive market price as factors for his interest.

Bitcoin-focused investment firm Pantera Capital as well as Bitcoin Investment Trust and the trading desk at Digital Currency Group – the Barry Silbert-lead entity that will find the entrepreneur separating his bitcoin industry activities from SecondMarket – have both revealed they are accepting applicants to join their bidding syndicates.

Interested participants can contact Pantera by 26th November providing information such as the desired bid size and price; a completed anti-money laundering (AML) and know-your-customer (KYC) form and a wallet address where any winning bids can be sent.

Further, on 20th November, the Digital Currency Group published a call for participants in its syndicate, asking interested bidders to provide their name, email and phone number to receive more details about the process. Unknown bidders

Other participants declined to comment for the story or offered no comment, citing the need for discretion given the stakes of the auction.

“We would prefer not to comment for reasons of commercial confidence on this one,” Australia-based bitcoin mining firm digitalBTC said.

Only one prior bidder contacted, the US-based bitcoin e-commerce website Bitcoin Shop indicated that it would not participate in the auction, despite entering a bid this summer.

“We’re going to pass on the auction now, we’ve got some other more important things we’re focusing on,” the company said in a statement.

Bitcoin Shop has recently been engaged in a strategic rebranding to become an onramp to the bitcoin ecosystem, though this process has not been without challenges.

Both BitPay and Coinbase, the latter of which was revealed in an early, leaked list of potential bidders, declined to comment.