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The Feds Are Ready To Sell $25 Million of Bitcoin Seized From The Silk Road

forbes.com

31–40 of 66 posts

Re: The Feds Are Ready To Sell $25 Million of Bitcoin Seized From The Silk Road

#31
post #6

Earlier quoted context omitted.

I honestly don't think the Bitcoin market is sophisticated enough to react to events like this. Certainly, if the feds really want to sell and someone puts $0.01 on the order books for that size of a trade, and nobody else is around, it could be filled, but I don't see that happening.

It wouldn't be unprecedented. I believe that mass sells have caused price crashes numerous times in the past. Perhaps I misunderstood you?

Sort of. To me, it looks indistinguishable from randomness with /r/bitcoin trying to explain the randomness with news stories. But maybe I'm wrong.

Re: The Feds Are Ready To Sell $25 Million of Bitcoin Seized From The Silk Road

#32
post #6
post #2

So that will depress the price right? Time for some cheap BTC

I honestly don't think the Bitcoin market is sophisticated enough to react to events like this. Certainly, if the feds really want to sell and someone puts $0.01 on the order books for that size of a trade, and nobody else is around, it could be filled, but I don't see that happening.

quannabe: It looks as though your account has been hellbanned.

Re: The Feds Are Ready To Sell $25 Million of Bitcoin Seized From The Silk Road

#35
post #2

So that will depress the price right? Time for some cheap BTC

Actually it might be interesting. Technically yes if they sold at any price they'd burn through the orderbook and the price would crash. But if they set a flat sell price then that'd make a buy (edit: sell) wall (price can not go above this amount until all 25 million have been purchased). The sell wall could help stabilize the price.

They are not buying coins, they are selling them, so it would be a sell wall. The price couldn't go _above_ their selling price until all 25 million (dollars worth) have been sold.

Re: The Feds Are Ready To Sell $25 Million of Bitcoin Seized From The Silk Road

#36

Hold on they haven't found anyone guilty in a court yet have they?

Civil forfiture doesn't require a criminal conviction. In fact there's hardly any process at all. Just one more twisted doctrine justified by the War on Drugs.

To expand on this, from wikipedia:

"In civil forfeiture cases, the US Government sues the item of property, not the person; the owner is effectively a third party claimant. The burden is on the Government to establish that the property is subject to forfeiture by a "preponderance of the evidence." If it is successful, the owner may yet prevail by establishing an "innocent owner" defense.

In civil cases, the owner need not be judged guilty of any crime; it is possible for the Government to prevail by proving that someone other than the owner used the property to commit a crime. In contrast, criminal forfeiture is usually carried out in a sentence following a conviction and is a punitive act against the offender.

The United States Marshals Service is responsible for managing and disposing of properties seized and forfeited by Department of Justice agencies. It currently manages around $2.4 billion worth of property. The United States Treasury Department is responsible for managing and disposing of properties seized by Treasury agencies. The goal of both programs is to maximize the net return from seized property by selling at auctions and to the private sector and then using the property and proceeds for law enforcement purposes."

http://en.wikipedia.org/wiki/Asset_forfeiture#United_States

Since the Government sues the property itself, and since property itself has few if any rights, you can understand how the entire process becomes rather... one sided.

Re: The Feds Are Ready To Sell $25 Million of Bitcoin Seized From The Silk Road

#38
post #18

I somewhat would think they'd actually want to maintain ownership - but create the illusion they no longer do, so then they can make transactions. It'd be smart to track how those Bitcoin move and all accounts it touches.

What could they hope to learn from trading with others that they can't figure out now?

It is already pretty transparent: http://blockchain.info/

Re: The Feds Are Ready To Sell $25 Million of Bitcoin Seized From The Silk Road

#39
post #21
post #17

The article speculates these Bitcoin will be auctioned off. I wonder if that would be the entire wallet as one lot. Not too many people have the resources and willingness to throw $25 million into Bitcoin outside of the Winklevoss twins and hedge funds. Odds are they might get a good discount, but that might be preferable to the Bitcoin economy than the government selling the coins in smaller lots. 30k coins suddenly…

Only if they try to sell them in a trading venue. Anyone with the bankroll to buy that many probably understands how markets work.

Rereading my prior post, it was a little unclear. Let me expand on my prior point. The Bitcoin market is neither liquid or large enough to absorb 30k new coins and remain stable. That means the US government isn't going to get $850 per coin. The effects on the market will likely depend on how the coins are sold.

Scenario 1:

There is a single large buyer. Assuming the buyer and US goverment are smart, they will recognize the liquidity risk of Bitcoin. The buyer will then get a discount for this and be able to purchase the coins at a below market rate. Assuming their plan is to hold onto the coins for the long term (or at least not short term), I wouldn't expect a large movement in the general Bitcoin markets.

Scenario 2:

There are many small buyers. Each sale would slightly effect the price of Bitcoin as each sale would slowly satisfy demand. The US government might receive $850 per coin for the first sale, but certainly wouldn't for the last sale. This would cause the biggest harm to the market as the price would drop more than in scenario 1.

TL;DR - The US government either needs to accept a lower price for the sake of liquidity or accept that their sales will quickly lower the market rate for Bitcoin.

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