As reported by Coindesk today, the US Marshals are going to be auctioning off over 4.3M in Bitcoin later in November. This is not unlike when the government seizes other property from criminal means. It just is interesting that this is a digital asset, and not a boat.
Who’s Bitcoin is It
This particular bitcoin belongs to some naughty people from Arizona and California (a money launderer named Thomas Mario Constanzo who was recently sentenced to 41 months in jail, and an illegal trader named Theresa Tetley).
How Does The Auction Work?
This is where I am a little lost. What I understand is that it is a blind auction for blocks of bitcoin – 2 blocks of 100 bitcoins and 1 block of 60 bitcoins. You have to be an accredited investor, and deposit at least 200K to be in the auction. Buyers then submit a blind bid that is not changeable.
So is this just a race to the bottom? I assume everyone just bids the lowest amount they are comfortable with but is less than the current price of bitcoin, or the trailing 30 day average. Then the government takes the highest of these bids? Questions:
- What is the competitive advantage of participating in an auction?
- Can you actually get coins at cheaper than face value?
If you have any answers to these questions please post in the comments.