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Second Market outbid in U.S. Marshals bitcoin auction
June 30, 2014 / 9:46 PM / 3 years ago

Second Market outbid in U.S. Marshals bitcoin auction

NEW YORK, June 30 (Reuters) - Second Market, one of the more prominent bidders in the U.S. Marshals bitcoin auction, on Monday said it was outbid in its attempts to buy some of the nearly 30,000 coins sold late last week.

The rejection of one 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 investors.

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 Marshals Service.

Barry Silbert, founder and chief executive officer of Second Market Holdings, which runs a bitcoin investment platform, confirmed in an email to Reuters on Monday that he tweeted earlier that 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 suggests interest was likely strong.

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.

Bitcoin is a virtual currency that has gained a following but also 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., Coinbase and Pantera Capital. None of those three would comment on whether they had been informed of the results.

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)

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