(In ninth paragraph, fixes order of transposed words "which
By Gertrude Chavez-Dreyfuss and Sarah McBride
NEW YORK, July 2 Venture capitalist Tim Draper
was the sole winner of an auction last week of 30,000 bitcoins
by the U.S. Marshals Service, according to a statement on
Draper is partnering with Palo Alto-based Vaurum, which
facilitates over-the-counter bitcoin trading, Vaurum Chief
Executive Officer Avish Bhama said in a statement. Draper, a
major backer of Vaurum, will partner with the company to use the
coins as a liquidity source for Vaurum's trading platforms in
emerging markets, the statement said.
The bitcoins, a virtual currency that is "mined" by
computers solving complex algorithms, were seized last year by
the Marshalls Service in a crackdown on illegal online activity.
Acceptance of bitcoin has been growing as more merchants
allow customers to pay for goods and services with the currency.
"With the help of Vaurum and this newly purchased bitcoin,
we expect to be able to create new services that can provide
liquidity and confidence to markets that have been hamstrung by
weak currencies," Draper said in the statement.
The U.S. Marshals Service auctioned off 29,655 bitcoin at an
estimated worth of about $18 million in an online, sealed-bid
auction that drew more than 40 bidders, including a number of
well-known players in the crypto-currency. Terms of the sale
have not been disclosed, but the success gives the virtual
currency more legitimacy as a means of exchange.
The bitcoin was part of 144,000 bitcoin seized in October in
a raid on Silk Road, an Internet black-market bazaar that
authorities said had been used for illegal drug transactions and
A spokeswoman for the U.S. Marshals Service said Wednesday
it will not conduct another auction of bitcoins unless there is
a court order for the agency to do so.
Draper is something of Silicon Valley royalty, the son of
one of the nation's first venture capitalists and father of
another. In 1985 he founded Draper Associates, the firm which
would grow into Draper Fisher Jurvetson, known for investments
such as online communication service Skype, electric carmaker
Tesla and Chinese web services company Baidu.
Like many in Silicon Valley, Draper has embraced bitcoin,
which with its open internet architecture and growing use as an
alternative currency, appeals to venture capitalists and their
fondness for open and disruptive technologies.
"Of course, no one is totally secure in holding their own
country's currency. We want to enable people to hold and trade
bitcoin to secure themselves against weakening currencies," the
Vaurum statement said.
Andreessen Horowitz and Union Square Ventures back bitcoin
wallet Coinbase and Lightspeed Ventures backs bitcoin exchange
In addition to Draper, Vaurum has backing from former AOL
Chief Executive Officer Steve Case and Battery Ventures.
(Additional reporting by Nate Raymond; Editing by Bernadette
Baum and Cynthia Osterman)