The Feds are seeking to put nearly 4,000 bitcoins on the auction block — currently worth approximately $50 million — seized in criminal, civil and administrative cases, BGR reported.
On Thursday, the U.S. Marshals Service said it will hold an auction in February to dispose of 3,813 bitcoins, which are valued at a sizable $52 million at today’s price.
Bitcoin auctions are fairly routine for the service, with the government auctioning off bitcoins seized from Silk Road-related cases in 2016, for example. But the recent volatility in bitcoin prices — the currency tumbled 12 percent on Thursday before regaining 7 percent of its value — means that the Feds are, in theory, gambling in cryptocurrency.
Due to massive price swings — such as the ones that occurred on Thursday — the timing of the auction could have a major impact on how much money the government is able to recover. Yet, for bidders, the simple nature of the auction and the massive quantity of coins could present an opportunity to make loads of cash.
Investors have to register by Jan. 19 to bid in the auction, and they have to fork over $200,000 for a deposit. In comparison to most bitcoin trades, in which investors exchange fractions of a coin, the auction will offer bitcoins in large blocks. The smallest block is 500 coins, for example, which is worth approximately $1.4 million.
Savvy investors can profit off the auction by purchasing a block below its current market value and splitting it into smaller pieces to turn a profit.
In the 2016 auction that included coins seized from Silk Road-related cases, the Feds auctioned off more than 2,700 bitcoin that were turned over to the government. While only 2.8 bitcoin in the auction came directly from Ross Ulbricht, who law enforcement said operated the underground website, nearly 1,300 were from a civil forfeiture case related to a Silk Road drug dealer who received a nine-year sentence in 2015.