The US Government through the US Marshal office has now entered the Bitcoin ‘mixing’ service space, offering an unprecedented service that will “clean” the Bitcoins that were considered “illegal” and turn them into effectively “washed” Bitcoins.

Visit this link to read more about the process of taking the proceeds of criminal activity and making them appear legal.

After months of deliberation, the US Marshal office has been set with the task of selling the Bitcoins that were seized from an FBI bust in October 2013.

Last year the infamous Dread Pirate Roberts, who ran the Free Marketplace online shopping Bazaar known as Silk Road, was captured by the notorious FBI, who also managed to capture the Silk Road servers and obtained the coins that were held on the servers, just under 30,000 Bitcoins.

Of note is that Silk Road 2.0 is up and running and the Dread Pirate Roberts, like the movie’s namesake, is still out there.

Mixing services are used in the Bitcoin world to enhance privacy, as the Blockchain is completely transparent and traceable without extra precautions taken to hide one’s activity on the Blockchain.

Mixing services are often referenced or pointed at when people discuss money laundering in connection with Bitcoin. But how can such money laundering services (if used as such) compete with the US government openly selling “tainted” coins on the market?

The US Marshal office plan to sell the coins off in blocks of 3,000 coins for 9 blocks and the remainder in the last block, stating that interested parties must:

“Required Registration Items:

A manually signed pdf copy of the Bidder Registration Form

A copy of a Government-issued photo ID for the Bidder (or Control Person(s) of Bidder)

$200,000 USD deposit sent by wire transfer originating from a bank located within the United States (please provide receipt of transfer)”

Can it be said that once a buyer has the coins they are considered a legitimate gain?

Not all the coins seized by the Fed were gained via selling illegal products, some individuals on SR were selling only legal products.

The Bitcoins that the FBI hold from legitimate sellers are basically stolen coins, stolen by the FBI, and now being sold off and given a ‘clean’ bill of health, backed by the US government – though the FBI would likely state that usage of the Silk Road was a criminal act in itself and therefore the coins were forfeit.

If laws apply, should they not apply to all men and entities? Or else what is the point of such laws but an obvious hammer to control the masses when it only exists for the people and not all?

The situation is sure to be repeated in the future by various governments around the world. Seizing illegally gained bitcoins and reselling them to interested parties, after proper due diligence has been done on the legal seizure of such coins…and then being able to state that the coins are legitimately “clean”, or at least backed by Government to be represented as clean.

Is this possibly a glimpse into the future of a service that might emerge in the Cryptocurrency sector: a coin validation or ‘cleaning’ service. Would such a thing even be possible?

I do wonder about the man from Devon, if he ever succeeds in his case for the return of his monies: would the Fed then have go and buy some bitcoins from somewhere?

And what would be the point of cleaned coins, would they serve some specific purpose or be of interest to anyone? Maybe they might be of higher value to interested parties who would then be able to validate the legitimacy of the coins they possess.

Disclaimer: The author is not accusing anyone or entity of anything, he is just making an observation from a different point of view.