US to auction seized Silk Road Bitcoins worth $18m

Marshals Service The US Marshals Service announced the auction on its website

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The US government will auction $18m (£11m) worth of the virtual currency Bitcoin, which was seized by the FBI when it shut down the Silk Road online marketplace in October last year.

The site, which operated on the so-called "dark net", traded in drugs and other illegal goods.

Payments were made via crypto-currencies, to ensure anonymity.

The Bitcoins were seized during the arrest of Ross Ulbricht, the alleged mastermind behind Silk Road.

What was the Silk Road?

Silk Road took its name from the historic trade routes spanning Europe, Asia and parts of Africa.

News reports and other internet chatter helped it become notorious. However, most users would not have been able to stumble upon the site as the service could only be accessed through a service called Tor - a facility that routes traffic through many separate encrypted layers of the net to hide data identifiers.

Tor was invented by the US Naval Research Laboratory and has subsequently been used by journalists and free speech campaigners, among others, to safeguard people's anonymity.

But it has also been used as a means to hide illegal activities, leading it to be dubbed "the dark web".

Payments for goods on Silk Road were made with the virtual currency Bitcoin, which can be hard to monitor.

Court documents from the FBI said the site had just under a million registered users, but investigators said they did not know how many were active.

The 29-year-old, who was known online by the pseudonym Dread Pirate Roberts, or DPR, is currently awaiting trial on narcotics trafficking, computer hacking and money laundering offences.

In a statement, the US Marshals Service, which is conducting the sale, said the 29,656.51306529 Bitcoins up for auction were those that had "resided on Silk Road servers", but did not include the stash on Ross Ulbricht's personal computers.

Ulbricht's "wallets" are thought to be worth more than $85m at current Bitcoin exchange rates. He is contesting the claim that the money was earned illegally.

The Bitcoins offered in this auction have been forfeited to the US government.

The US authority added that it would "not sell to any person who is acting on behalf of or in concert with the Silk Road and/or Ross William Ulbricht, and bidders will be required to so certify".

Last year, Carnegie Mellon University estimated that over $1.22m (£786,183) worth of trading took place on the Silk Road every month.

Prospective bidders will have to put forward a deposit of $200,000, and all offers must be made in cash.

The price of Bitcoin, as measured by CoinDesk, fell following news of the sale, but has since made a modest recovery.

The bidding process will begin on 27 June.

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