Silicon Valley investor Tim Draper won part of an auction of 50,000 bitcoins auctioned by the U.S. government, which is disposing of virtual currency seized from the Silk Road online marketplace.
Draper, who bid on behalf of Menlo Park-based Draper Associates, said in an emailed statement that he bid successfully for 2,000 bitcoins at Thursday’s tender. The auction was the second sale after the U.S. Marshals Service sold almost 30,000 bitcoins in June, which Draper won in its entirety. Draper didn’t disclose how much he paid for either winning bid.
After yesterday’s auction, the agency will still have more than 94,000 bitcoins, worth about $35 million at current prices, to sell. The price of bitcoin has declined about 42 percent since the June auction, according to CoinDesk’s Bitcoin Price Index, an average of bitcoin prices across leading global exchanges. Thursday’s auction attracted 11 bidders, the agency said, compared with 45 bidders the last time.
Pantera Capital and a syndicate created by the trading division of SecondMarket also said they planned to participate in the auction.
Draper Associates will invest 300 bitcoins into every company that works with Boost, a bitcoin startup accelerator founded by Draper’s son, Adam Draper.
“The interesting part is that we are fixing the valuation, and the 300 bitcoins are worth about $120,000 today, but may be worth quite a bit more (or less) when the entrepreneurs receive them,” Draper said in the email.
The auction is part of a cache of bitcoins the FBI transferred to U.S. Marshals after shutting down Silk Road, which the U.S. said was run by Ross William Ulbricht. The marketplace was an online bazaar where anonymous users allegedly bought and sold heroin, LSD, phony passports and computer hacking services.
The auctions represent a rare opportunity to secure a large amount of the virtual currency. Because liquidity on the exchanges is low — a trade of 500 bitcoins can move prices — buying from the government offers a chance to avoid paying a premium.
