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U.S. Proescutors Obtain Millions in Bitcoin

Sunday, January 19, 2014 9:38

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(Before It's News)

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Federal prosecutors in Manhattan have to figure our what to do with $27 million worth of Bitcoin confiscated after the closure of an anonymous black market site authorities say was used to exchange drugs and computer hacking services. And the value of the haul could grow if the price of the currency continues to increase.

The Guardian reports:

No one stepped forward to claim these bitcoins, which were found in electronic “wallets” used to store the digital currency. An additional 144,336 bitcoins, worth more than $128m today, were also discovered, but the government’s claim on them is being disputed by Ross William Ulbricht, 29, who US authorities say was the founder and main operator of Silk Road. They had been stashed on his laptop.

It all puts authorities in an unusual position, given their concerns about the way in which bitcoins and other digital currencies are used by criminals to circumvent regulations intended to prevent money laundering. By trading in bitcoins, the government could give the currency some legitimacy.

… The US Marshals Service, which is in charge of liquidating such seized assets, will have to decide whether to sell the units on a Bitcoin exchange or find a private buyer, perhaps through an auction.

… The timing of any sale could make a big difference in the amount the government could realise. Bitcoin’s value has fluctuated wildly over the past six months. When Silk Road was seized, the bitcoins found on the server were worth $3.6m, far below their current $27m value. Friday’s exchange rate was about $900 per bitcoin, according to the Tokyo-based Bitcoin exchange MtGox.

… Most goods seized by US authorities end up in the hands of the US Marshals, where they are auctioned or, at times, repurposed for government use. But the Marshals are not just experienced in unloading forfeited SUVs or houses; they also deal with complex financial instruments, foreign companies and other kinds of obscure assets forfeited by criminals.

—Posted by Alexander Reed Kelly.

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