The US Marshals have announced they’ll be auctioning nearly 30,000 Bitcoins seized from legal actions taken against Silk Road 1.0. The auction will sell off nine blocks of 3,000 BTC (referred to as “A” blocks) and one block of 2,656.51 coins. At current market price ($587 as of this writing) that’s a nice $17.4 million worth of Bitcoins. BTC price has been volatile today, possibly in response to the announcement, as a new block of currency hitting the market could drive prices downward. Before this point, BTC prices had been fairly stable in the mid $600 range.

There have been questions raised about whether or not these coins are actually the property of Ross William Ulbricht (the supposed Dread Pirate Roberts), but the Marshals’ auction statement makes it clear that these coins are not the stated property of Ulbright. In fact, the Dread Pirate was quick to disassociate himself with these wallets, as owning them might actually be used as further proof that he occupied that role and therefore aid in his criminal conviction.

The auction isn’t open to just anyone — those interested in ordering a block of coins must send a $200,000 deposit to demonstrate an ability to pay for the coins. If you win, your $200,000 deposit is used toward the purchase price. If you lose, the funds are returned.

Asset forfeiture

One topic that’s come up is the question of whether or not the government has the right to sell these BTC in an auction, or if the forfeiture laws are unfair to the coin’s original owners. While there have been some unquestionably dubious cases where asset forfeiture was used unjustly in the United States, in this case, no one has stepped forward to claim the original coins (or some portion of them).

Given the nature of what the Silk Road dealt in, it’s incredibly unlikely that any of the funds in question were used to purchase Haribo gummy bears or actual legal merchandise, which means the government is well within its rights to sell the BTC and recover the proceeds. The coins belonging to Ulbricht, however, will not be sold at this point — as identified personal property, their disposition will hinge on whether or not he’s found innocent or guilty at trial. Meanwhile, the Silk Road itself has apparently reformed to some degree under a new Dread Pirate Roberts and is again doing business — though whether it has reached its original size and scale is still unknown.