U.S. auctions nearly 30,000 bitcoins seized in raid on 'Silk Road' online market

By Nate Raymond

NEW YORK (Reuters) - The U.S. Marshals Service on Friday 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.

An online auction took place over a 12-hour period on Friday for the bitcoins, valued at nearly $17.7 million. It consisted of nine blocks of 3,000 bitcoins and one block of 2,657 bitcoins. The Marshals Service has said it would notify the winning bidders on Monday.

A spokeswoman for the Marshals Service declined to say how many bids the office received. Among those who said they registered to participate in the auctions were SecondMarket and Bitcoin Shop Inc.

Silk Road was shutdown 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.

Chris DeMuth, a partner at Rangeley Capital who had been considering bidding, said last week the chance the Marshals Service gets the market price for the bitcoins is low.

"Anyone could pay market prices on existing exchanges," he said. "So the key question is how much of a discount do bidders want."

The Marshals are holding about 144,342 additional bitcoins found on computer hardware belonging to Ulbricht that were subject to a civil forfeiture proceeding.

Ulbricht, 30, is scheduled to face trial Nov. 3. He has pleaded not guilty to the four counts against him, including money laundering conspiracy and engaging in a continuing criminal enterprise.

U.S. authorities have separately charged three men - Andrew Jones, Gary Davis and Peter Nash - in connection with their alleged roles in assisting Ulbricht in operating Silk Road.

Bitcoin prices were up 3.1 percent Friday at $597.41 per coin, according to the digital currency exchange CoinDesk.

(Reporting by Nate Raymond in New York; Editing by Noeleen Walder and Andre Grenon)

[Image: A bitcoin sticker is seen in the window of Locali Conscious Convenience store, where one of Southern California's first two bitcoin-to-cash ATMs began operating in Venice, Los Angeles, California, June 21, 2014. By Lucy Nicholson for Reuters]