Remember the Silk Road bust in October, 2013.  In the month of October 2013, FBI in a pan US-Europe operation took down the online drug market called Silk Road which sold drugs for Bitcoins. This FBI bust resulted in arrest of Willian Ulbricht the chief operator of Silk Road and also seizure of around 30000 Bitcoins in addition to 144,000 Bitcoins belonging to Ulbricht himself


These 30000 Bitcoins (actual : 29655) were being used as a evidence in the case against the operators of Silk Road, which District Atorney Preet Bharara was representing for United States.  On Thursday, the Judge, in whose court the matter was being heard, signed a ‘forfeiture order’ for these 29655 Bitcoins.  This means that now this 29655 Bitcoins are officially the property of United States Government.

This 29655 Bitcoins if sold today (current market price 1Bitcoin = $911.00 will fetch the US Government around  $ 24,800,000 or 25 million approximately and looks like the DA’s office is going to sell it.

“We have not yet determined exactly how the Bitcoins will be converted and liquidated,” said Manhattan U.S. Attorney Office spokesperson Jim Margolin.

But selling the Bitcoins poses a unique problem for the FBI because whatever Bitcoin exchanges are operating as of now are not legally certified by the Federal Reserve.  Second thing is that the amount of Bitcoins (29655) is huge and may cause potential mini crash if sold at once.

The biggest Bitcoin exchange Mt.Gox  has already been in trouble with the US authorities in the past for operating in the US without a valid license.  So if Fed do choose Mt.Gox, it will be seen as a sort shadow acceptance of Mt.Gox which the US authorities may not like.  Ditto for other big Bitcoin exchanges around the world like BTC-e based in Bulgaria.

So the only possible way to get rid of this Bitcoins is through a auction and that remains a possibility as per DA’s office.  When the raid happened in October, 2013 the value of these 29655 Bitcoins was $6 million but with Bitcoin appreciating against the United States Dollar the way it did, the current price is like a windfall gain for the United States Treasury.

The other 144,000 bitcoins seized from Ross Ulbricht, who has been alleged by FBI to be Silk Road founder Dread Pirate Roberts, will remain in the FBI’s custody as of now A Ulbricht has filed a forfeiture claim for the same.

“Ulbricht has filed a claim in the civil forfeiture action, asserting that he is the owner of the Bitcoins found on his computer hardware, and contesting the forfeiture of those Bitcoins,” notes the Manhattan U.S. Attorney’s press release.