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Crypto Auctions: Where Do Arrested Bitcoins End Up?

From their early days, cryptocurrencies have been associated by many with black markets and illicit activities. Bitcoin’s feature of allowing direct payments to be made from one party to another without the involvement of financial institutions, has been also utilized as a way to avoid institutional controls and settle illegal transactions.

A recent study of University of Technology Sydney (UTS) found that “approximately one-quarter of Bitcoin users and one-half of Bitcoin transactions are associated with illegal activity”

On the other hand, given that there are almost 28.5 mln Bitcoin wallets that hold more than 0.001 BTC and many users own several wallets – with some inactive – the magnitude of this phenomenon is considerably reduced.

Regardless, it is a fact that some illegal activities are done with cryptocurrencies. While it seems quite simple to seize a fiat account or appropriate cash, the nature of cryptocurrencies makes this process much more complicated. Let’s analyze some cases where the government authorities seized cryptocurrency assets due to illegal activities and find out where they end up.

International authorities did not try to underestimate the issue. Europol recently recognized that “three to four bln pounds of criminal money in Europe is being laundered through cryptocurrencies”.

Europol’s Executive Director Rob Wainwright underlined that:

“Proceeds from criminal activity are being converted into Bitcoins, split into smaller amounts and given to people who are seemingly not associated with the criminals but who are acting as ‘money mules’. These money mules then convert the Bitcoins back into hard cash before returning it to the criminals”.

Silk road

In this complicated scenario, international prosecutors reacted by performing some important police operations. One of the most widely known operations was carried out in Oct. 2013 with the closure of Silk Road.

Silk Road was a website that operated as an online black market for selling illegal drugs, and used Bitcoin for settling the deals between site users. After two years of investigation, the US Federal Bureau of Investigation (FBI) arrested the founder and seized over 170,000 Bitcoins, which, at that time, accounted for about 1.5 percent of all the Bitcoins in circulation.

The closure of Silk Road was not the only activity carried out by international authorities to fight against illicit markets around cryptocurrencies. In Nov. 2014, the police of Hesse, Germany, together with Europol and the FBI, operated against illegal online shops Hydra and Silk Road 2.0, which were also engaged in the sale of drugs.

According to law enforcers, these shops were used by approximately 150,000 people, who each month used to buy drugs worth millions of euros using Bitcoins. This operation resulted in the seizure of of 126 Bitcoin from the owners of the websites.

Bulgarian case

But maybe the most impressive operation rolled out by international authorities has been done on May 19, 2017 by the Bulgarian police with the support of the Southeast European Law Enforcement Center (SELEC). The joint forces stopped an organized criminal group that was recruiting corrupt customs officers in many European countries, with the purpose to infiltrate a virus in the customs’ computerized systems and avoid the payment of taxes.

The offenders choose the Bitcoin as a way of investing the money resulted by their activities, considering them rather difficult to be tracked. As a result of the police investigation, an impressive number of 213,519 Bitcoin has been seized.

Cryptocurrency auctions

The seizing of cryptocurrencies has been increasingly the result of international investigations, with examples of this measure taken in many countries including the US, Germany, Bulgaria and UK. National authorities have started thinking about what to do with the seized coins. The US was one the first countries to approach the issue and started organizing auctions selling the appropriated cryptocurrencies.

The United States Marshals Service (USMS), a federal law enforcement agency within the U.S. Department of Justice, auctioned different lots of Bitcoins catched by different state authorities. One of the most recent sale has been held on Jan. 11, 2018 where the USMS auctioned a total of 3,813 Bitcoin in three different lots respectively of A) 2,500; B) 500; C) 813.

Given the value of the Bitcoin at approximately 11,500 USD the closing day of the auction (Jan. 19), the result granted an amount of around $44 mln in revenue to the state. Similarly, in Germany, the authority of the state of Hesse hope to gain millions from the sale of the 126 seized Bitcoins.

What about Bulgaria? According to calculations, the value of the 213,000 seized Bitcoins would be enough to pay off one-fifth of Bulgaria’s national debt. At present, the proportion would be a little different as the debt of the country is around $16 bln whereas the value of that pot of bitcoins would be around $2 bln.

However today it’s not clear whether or not the authorities really possess these coins. The head of Bulgarian Special Prosecutor’s Office, Ivan Geshev, recently said that the Prosecutor’s Office and the Interior Ministry had not seized Bitcoins.

More auctions to come

The fight against the misuse of funds for financing black markets and illicit activities has to tie up more its activities towards the use of crypto currencies. Given the extreme rapidity through which cryptocurrencies can be moved between wallets, states, and continents, a stronger collaboration between international authorities would also be necessary to conduct special operations.

Seizing and then auctioning cryptocurrencies, in case of a confirmed illicit use, could be both a strong deterrent for criminal users and, in some instances, a good source of income for state revenues.                

Uniformity between the various international authorities on the approach regarding the auctioning procedures could be a desirable development, in order to guarantee a fair and transparent process around the redistribution of the cryptocurrency assets. A rigorous process of identification could also guarantee that the participants are not connected to any illicit activities, and to avoid the process to start over again.

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US Marshals Office Auctions Off Another $18.7M in Bitcoin

The U.S. Marshals Office successfully sold 2,170.7 bitcoins to two bidders in its most recent auction on March 9, a spokesperson announced Thursday.

In a press statement, the spokesperson said that the bitcoins had been distributed to the winning bidders, one of whom received 2,100 and the other who bought the remaining 70.7.

It is unclear whether the bitcoins were bought at market prices, but at press time the combined total value of the bitcoins was roughly $18.7 million.

Forty-two bidders registered for the auction, and 39 bids were received, the spokesperson said.

The auction was announced on March 5, when the Marshals stated the coins would be sold in 14 different blocks (as in “lots,” not the cryptocurrency meaning of the word).

The smallest auction block contained roughly 70 bitcoins, while the other 13 blocks contained either 100 or 500 bitcoins.

The Marshals last sold bitcoins in February 2018, when more than 3,600 bitcoins were auctioned to five winning bidders. At the time, Riot Blockchain claimed it had bought one of the blocks of 500 bitcoins.

This time, the winners from the March 19 auction have so far not identified themselves.

Stepping back, this is the second bitcoin auction the Marshals have participated in since 2016, when they sold 2,700 bitcoins.

Auction image via Shutterstock

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US Marshals to Sell $25 Million in Bitcoin at Auction

The U.S. Marshals are set to auction off nearly $25 million worth of bitcoin later this month.

The government agency announced Monday that it will put approximately 2,170 bitcoins on the auction block, with the sale planned for March 19. Would-be bidders must submit a $200,000 deposit and complete the registration requirements by March 14 to participate, according to the Marshals Service.

This month’s auction will consist of 14 separate blocks, with two blocks of 500 BTC, 11 blocks of 100 BTC and one block accounting for 70 BTC.

According to the release, the bitcoins were confiscated in “connection with various federal criminal, civil and administrative cases,” ranging from federal trials to Drug Enforcement Agency actions.

The provenance of most of the seized bitcoins is listed online, which notably mentions that some of the coins involved were traced to the case involving Shaun Bridges, the ex-Secret Service agent who was sentenced to prison after being accused of stealing funds during the Silk Road investigation.

The March 19 sale marks the latest bitcoin auction by the agency. Just last month, the U.S. Marshals auctioned off more than 3,600 bitcoins to five winning bidders, an amount worth more than $30 million at the time. It’s also the second sale to take place within a nearly two-year period, given that prior to this year, the last auction occurred in mid-2016, when the agency sold 2,700 BTC

In what is perhaps a sign of how the value of bitcoin has increased since then, the coins on the docket that year were worth just $1.6 million at the time.

Auction image via Shutterstock

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US Marshals Successfully Auction Off $30 Million in Bitcoin

The U.S. Marshals Service has successfully auctioned off approximately 3,613 bitcoins (worth nearly $30 million at press time) confiscated in various crimes.

A spokesperson for the agency, which manages the sale of seized and forfeited assets, confirmed to CoinDesk today that the sale, which took place on Jan. 22, saw five successful bids.

The unknown winner received 1,600 bitcoin (worth about $13.4 million at press time), with the remaining buyers receiving 500, 500, 200 and 813 bitcoins (worth $4 million, $4 million, $1.6 million and $6.7 million respectively).

With the exception of Riot Blockchain, which claimed one of the two 500-bitcoin lots, the names of the winners were not disclosed. Riot voluntarily announced it had received 500 bitcoins.

The spokesperson said:

“The bitcoin transfers to the winners have been completed. The U.S. Marshals Service withdrew 100 bitcoins from the auction due to technical issues and is maintaining custody of the bitcoins.”

The agency first announced the sale on Jan. 11 revealing at the time that it was auctioning a little more than 3,800 bitcoins, worth about $54 million at the time.

When the bitcoins were sold on Jan. 22, they would have been worth roughly $42 million.

The day after the sale, the agency confirmed it had received 111 bids from 62 unique registered bidders . To register, each bidder had to deposit $200,000 and complete a registration process.

Auction mallet image via Shutterstock

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US Marshals Service to Auction Off $54 Million in Bitcoin

The U.S. Marshals Service has announced that it will auction off more than 3,800 bitcoins later this month.

The auction will take place on Jan. 22, according to a representative from the service. The event marks the first time since 2016 that the U.S. Marshals Service has held a bitcoin auction, after the agency sold off 2,700 bitcoins – an amount worth about $1.6 million at the time and now valued at about $51 million – in August of that year.

At press-time prices, the 3,813 BTC up for grabs is worth roughly $54 million.

The forthcoming auction follows a similar structure, according to the agency, with the stash of 3,813 bitcoins being divided into multiple auction blocks.

The Marshals Service explained:

“The auction will take place during a six-hour period Jan. 22 from 9:30 a.m. until 3:30 p.m. EST. Bids will be accepted by email from preregistered bidders only. The 3,813 bitcoins are offered for sale in 11 blocks: five blocks of 500 bitcoins, five blocks of 100 bitcoins and one block of approximately 813 bitcoins.”

Prospective participants much register with the Marshals Service by noontime EST on Jan. 19, the agency said, a requirement that includes a $200,000 refundable deposit. The winner of the auction will be notified that same day.

The service had previously held several auctions in connection with bitcoins seized from the now-defunct dark market Silk Road. Over that months-long process, the Marshals Service auctioned more than 144,000 bitcoins.

Image via Shutterstock

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Ross Ulbricht Drops Claim to Millions Raised in Silk Road Bitcoin Auctions

Ross Ulbricht, the convicted operator of the now-defunct dark marketplace Silk Road, has dropped a long-standing claim to millions of dollars previously seized by US law enforcement.

Court records show that on September 29, US District Judge Katherine Forrest issued an order forfeiting just over $48 million to the US government. Those funds were gained as the US Marshals Service auctioned off more than 144,000 bitcoins confiscated during the crackdown on the Silk Road, an unregulated marketplace that used bitcoin as a primary medium of exchange prior to its closure in late 2013. Ulbricht had previously sought to regain possession of the funds after they had been seized.

The US government held its first bitcoin auction in 2014, during which nearly 30,000 BTC was sold to Silicon Valley investor Tim Draper (who would later buy 2,000 BTC in a subsequent auction). The final auction was held in November 2015.

Notably, the forfeited $48 million will count toward the more than $180 million in monetary judgments he was ordered to pay at sentencing. Ulbricht, found guilty in February 2015 on narcotics distribution and computer hacking charges, was sentenced to life in jail without parole in May of that year.

“The sum of $48,238,116.04 shall be credited in partial satisfaction of the Money Judgment,” Forrest wrote in the court order.

The forfeiture also comes months after Ulbricht’s failed appeal of the judgment. In May, the US Court of Appeals for the Second Circuit issued a 139-page decision that rejected the claim by Ulbricht that he had been given an unfair trial as well as an overly harsh sentence.

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DomRaider Looking to Revolutionize Auctions Through Blockchain

Imagine if Apple or Microsoft allowed their domain names to lapse. What would the value of domain names like those be for their respective companies?

The answer is nearly priceless.

Now, scale that back a bit and consider a smaller company with decent market share who accidentally lets their domain name slip. What would the value be for a domain like that? The answer is only available at auction.

DomRaider has built a very successful multi-national auction house for domain names that have expired or lapsed. The company searches the web for domain names that come available and then auctions those names to the highest bidder.

New platform

However, though possessing a full book of business already, the company is seeking to create a new auction platform based on Blockchain technology. This platform would bring together the auction world with the power of Blockchain technology to revolutionize how auctions are processed.

An auction platform like the one DomRaider is creating would have some significant improvements over legacy systems. For starters, the platform would be scalable, reliable and transparent.  

Blockchain technology provides a structure where bids and data would be impossible to falsify, thereby protecting users and users would be able to verify bids from any user instantly.

Second, DomRaider’s technology solution would allow for a worldwide auction platform where users would be able to communicate directly. This provides a far greater user base for auctions, and ensures simple and easy decision making and transaction processing at a fraction of the cost of other auction systems.

Finally, the solution would also provide a very fast and secure platform to process and immutably record bids and outcomes. The infrastructure, as it stands, can provide consensus of bids in less than one second.

ICO coming

While DomRaider is already a thriving multi-national corporation, the company has seen the need for a Blockchain solution in their auction market space. They are seeking to create the solution through a decentralized network of users focused on management of any auction in the world, whether physical or digital, in real-time.

DomRaider’s thriving existing business means that the company has a proven track record of success, as well as a viable and pre-developed digital product to market to others. These are the key points for investors to be certain they are investing in a viable business model.

The ICO starts Sept. 12 and will conclude with the issuance of the DRT digital token on Oct. 11.

Tristan Colombet, the company’s CEO, says to Cointelegraph:

“The DomRaider ICO combines two key factors for success: innovation of groundbreaking technology by Blockchain experts and the maturity of an already well-established company and an experienced team.”

Disclaimer. Cointelegraph does not endorse any content or product on this page. While we aim at providing you all important information that we could obtain, readers should do their own research before taking any actions related to the company and carry full responsibility for their decisions, nor this article can be considered as an investment advice.