Newspaper article International New York Times

Syndicate Wins U.S. Auction of Seized Bitcoins

Newspaper article International New York Times

Syndicate Wins U.S. Auction of Seized Bitcoins

Article excerpt

SecondMarket , an upstart exchange, won all but one of the 20 Bitcoin blocks in the government's auction.

The Bitcoin frenzy appears to be fading. But an upstart exchange made a big bet last week that the virtual currency still holds promise as an investment.

The exchange, SecondMarket in New York, nearly swept the government's latest Bitcoin auction, winning 48,000 of the 50,000 Bitcoins for sale.

The exchange's syndicate, which received 104 bids from eight parties, won 19 of the auction's 20 Bitcoin blocks.

"Obviously, we're very thrilled with the results," said Brendan O'Connor, the managing director of trading at SecondMarket.

SecondMarket was started in 2004 by Barry E. Silbert, who runs the Bitcoin Investment Trust.

The venture capitalist Timothy C. Draper, who won all of the nearly 30,000 Bitcoins in the United States Marshals Service's first auction in June, said last Friday that he had won only 2,000 Bitcoins in last week's auction. He bid at the auction on behalf of his venture firm, Draper Associates.

The Marshals Service confirmed on Tuesday that SecondMarket had won 48,000 Bitcoins and that the transfer of the coins was completed on Monday.

The auction on Dec. 4 of 50,000 Bitcoins, worth about $19 million, was the second by the Marshals Service for Bitcoins seized in connection with Silk Road, the defunct online bazaar.

In June, it sold nearly 30,000 Bitcoins seized from Silk Road, which was shut down in October 2013 after the authorities claimed it was an online marketplace for illegal drugs and other illicit activities.

A number of other prominent Bitcoin players, including Pantera Capital and Mirror, previously called Vaurum, also participated in last week's auction.

Still, the latest sale raised questions about whether the appetite for Bitcoin among investors was subsiding.

The Marshals Service said last week that 11 bidders participated in the Dec. 4 auction, a sharp decrease from the first auction, when 45 bidders took part. The service received 27 unique bids this time, compared with 63 in June.

And at the time of the second auction, Bitcoin was trading around $370, down from its peak of about $1,150 a year ago and about $200 below its price at the start of the first auction in June, according to CoinDesk's Bitcoin Price Index. …

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