November 17, 2014 / 4:56 PM / 5 years ago

U.S. to auction 50,000 bitcoins seized in Silk Road case

NEW YORK (Reuters) - The U.S. Marshals Service said Monday it will auction 50,000 bitcoins seized during the prosecution of the alleged owner of Silk Road, an Internet black-market bazaar where authorities say illegal drugs and other goods could be bought.

A Bitcoin (virtual currency) coin is seen in an illustration picture taken at La Maison du Bitcoin in Paris July 11, 2014. REUTERS/Benoit Tessier

An online auction is scheduled for Dec. 4 for the bitcoins, valued at nearly $19.8 million. It would be the Marshals Service’s second such auction following an earlier one in June for almost 30,000 bitcoins seized during the 2013 raid on Silk Road.

The latest batch of bitcoins was found on computer hardware authorities said belonged to Ross Ulbricht, who prosecutors accuse of creating the underground website.

Authorities say in pursuing the case, the government has recovered 173,991 bitcoins, including about 144,336 recovered from computer hardware belonging to Ulbricht seized at the time of his arrest.

As part of a civil forfeiture proceeding, Ulbricht and the government in January reached a deal in which the bitcoins on his hardware would be sold, with the proceeds to be held pending the outcome of his case.

Potential bidders for the 50,000 bitcoins, which will be offered in 20 blocks, must register by Dec. 1. Winners will be notified Dec. 5.

The remaining 94,341 bitcoins from Ulbricht’s hardware will be auctioned “in the coming months,” said Lynne Donahue, a Marshals Service spokeswoman.

The previous set of 29,655 bitcoins, which were recovered from Silk Road’s servers, were won at auction by a single bidder, Silicon Valley venture capitalist Tim Draper. Terms were not disclosed.

Ulbricht, who prosecutors said was known online as “Dread Pirate Roberts,” faces trial Jan. 5 on charges including conspiracy, narcotics trafficking, and continuing criminal enterprise.

Ulbricht, 30, has pleaded not guilty. His lawyer declined comment Monday.

Bitcoin prices were up 1.79 percent Friday at $395.49 per coin, according to the digital currency news website CoinDesk.

(This version of the story corrects description of CoinDesk in last paragraph to clarify that it is a news website)

Reporting by Nate Raymond in New York; Editing by James Dalgleish and Dan Grebler

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