(Adds details, comments from Pantera)
By Gertrude Chavez-Dreyfuss
NEW YORK, June 30 SecondMarket and U.S.
investment firm Pantera Capital, two of the more prominent
bidders in the U.S. Marshals bitcoin auction, on Monday said
they were outbid in their attempts to buy some of the nearly
30,000 coins sold late last week.
The rejection of two of the biggest names in the bitcoin
industry is a potentially encouraging sign for the long-term
prospects of the crypto-currency because this means the auction
drew a lot of interest from other institutional as well as new
Pantera Capital chief executive officer Dan Morehead told
Reuters the firm was not able to purchase the bitcoins because
their bid was below the market price.
"The point is when this auction was announced, bitcoin was
trading at $634 and the general view was that the supply would
take the price down," Morehead said.
"But ultimately, the supply increased the demand for
bitcoins and now the price was higher than when the auction was
On Friday, the U.S. Marshals Service auctioned off about
30,000 bitcoins seized during a raid on Silk Road, an Internet
black-market bazaar where authorities say illegal drugs and
other goods could be bought. The Marshals Service said it was
notifying winners on Monday evening.
A spokeswoman for the U.S. Marshals Service said on Monday
the 12-hour auction for about $17.7 million in bitcoin drew 45
registered bidders and received 63 bids but would not disclose
the bidding price of the coins.
"The award process is ongoing, and we will have no further
announcements today," said Lynzey Donahue, a spokeswoman for the
Barry Silbert, founder and chief executive officer of
SecondMarket Holdings, which runs a bitcoin investment platform,
confirmed in an email to Reuters on Monday that he tweeted
earlier his firm had been outbid for the bitcoin auction on all
blocks. Silbert had made no secret of his desire to bid in the
auction, so his firm being outbid suggested interest was likely
Bitcoin prices were up 6.8 percent on Monday at $639.32,
according to the digital currency exchange CoinDesk. The
currency's price rose late in the afternoon in advance of
expectations for the sale's results.
"The bitcoins that were auctioned off would be in good
hands," said George Samman, chief operating officer, at BTC.sx,
a bitcoin derivatives trading platform.
"The investors will provide the stability to the industry
and reduce volatility in the market. These people will probably
hold the bitcoin over the long haul and that's good for the
Bitcoin is a virtual currency that has gained a following
but also has come under scrutiny due to scams related to virtual
currencies. However, its acceptance has grown, with satellite
operator Dish and online travel agency Expedia recently saying
they would accept payment in bitcoin.
Among those who said they registered to participate in the
auctions were Bitcoin Shop Inc. and Coinbase. Both declined to
Silbert had attracted a group of investors interested in
getting a share of the bitcoin auction by offering lower bid
sizes and a reduced upfront commitment. In a tweet last week he
said he received 186 bids from 42 bidders.
Silk Road was shut after an FBI raid in September 2013 as
agents took control of its server and arrested a Texas man, Ross
Ulbricht, that the authorities said owned and operated the
website. The auction was for 29,655 bitcoins contained in files
residing on its servers, which were forfeited in January.
(Reporting by Gertrude Chavez-Dreyfuss and David Gaffen;
Editing by Diane Craft)