U.S. Marshals Service to Auction $50M in Bitcoins

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Last month, the chairman of the U.S. Securities and Exchange Commission urged caution on investing in cryptocurrencies. This month, another branch of the federal government wants to sell $50 million worth of it. The U.S. Marshals Service announced Thursday that it planned to auction off 3,813 bitcoins on Jan. 22, each of which are valued at about $14,000, McClatchy Newspapers reports.  It’s the sixth such auction for the Marshals Service, which obtained bitcoins through criminal, civil and administrative forfeitures. At the last auction, bitcoins were valued at just $585 each. Caleb Watney of the libertarian think tank R Street Institute said it might seem “a little hypocritical” on the government’s part to warn people against buying the cryptocurrency while auctioning them off, but “it doesn’t make sense for law enforcement to just sit on this.”

Why auction off the bitcoins rather than trade them in for their current value? Marshals Service Lynzey Donahue said the auctions are conducted on court orders in individual cases. The cases leading to the announced auction involve charges of distributing controlled substances and dealing in large-scale dark web marketplaces such as Silk Road, among others. The FBI shutdown of Silk Road in 2013 resulted in the first bitcoin auction by the Marshals Service in June 2014, as well as several subsequent auctions, an offloading of more than 100,000 bitcoins. Steven Kessler, an asset forfeiture attorney in New York, said bitcoin auctions can become another way of making things tough for the guilty party: “Let’s say I’m a defendant with a $1 million money judgment, and I have a Lamborghini. It’s worth about $500,000, they sell it for $50,000, and that goes toward what I have to pay for my money judgment. The government has no incentive to get a good value in this auction, because they get $1 million either way. They don’t care.”

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