(Adds Draper's comments)
By Gertrude Chavez-Dreyfuss
NEW YORK, July 2 Venture capitalist Tim Draper,
sole winner of an auction last week of 30,000 bitcoins by the
U.S. Marshals Service, called the sale a vote of confidence by
the government in the nascent crypto-currency.
The well-known Silicon Valley investor partnered with Palo
Alto-based Vaurum, which facilitates over-the-counter bitcoin
trading, for the sale but would not discuss how much he paid.
Draper, a major backer of Vaurum, will partner with the
startup to use the coins as a liquidity source for Vaurum's
trading platforms in emerging markets, Draper told reporters in
Palo Alto on Wednesday.
"If they thought that they were going to try to put the
kibosh on bitcoin, I think they would have just buried these,"
Draper said, referring to the government's stance on the
currency. "Instead, they decided that this was of real value to
The bitcoins, a virtual currency that is "mined" by
computers solving complex algorithms, were seized last year by
the Marshals 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.
The U.S. Marshals Service auctioned off 29,655 bitcoins 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 bitcoins auctioned off were part of 144,000 bitcoins
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 other goods.
A spokeswoman for the U.S. Marshals Service said it will not
conduct another auction of bitcoins unless there is a court
order for the agency to do so.
Draper told reporters his next fund will sport "a very high
concentration" of bitcoin related investments.
"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.
Draper is from a prominent Silicon Valley family, the son of
one of the nation's first venture capitalists and father of
another. In 1985 he founded Draper Associates, 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.
With its open internet architecture and growing use as an
alternative currency, it appeals to venture capitalists fond of
open and disruptive technologies.
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, Cynthia Osterman and David Gregorio)