Topic: 2013-10-26 forbes.com - fbi-says-its-seized-20-million-in-bitcoins-from-ross-ulb (Read 5047 times)

someone got can.

Yeah they would either spread out the sales over a long time or auction it off to a bank or some high net worth buyer. Being able to buy 1% of an emerging market at market rate without effecting the price on the exchanges is certainly an attractive proposition.

You guys are right, I was trusting what an article said without double checking the MtGox market depth myself.

Regardless, it would be easy to spread the sale of 174k BTC over 2-3 exchanges and a month to not impact prices.

So the price would end up down around $10 - $30? I doubt anyone could take advantage of this though, unless it was their orders that got filled.

So if you had an order set at xbtc for $40 you would be smiling after the FBI made such a bad move. Afterwards no one will follow suit and sell into that hole and the price would recover quite quickly.

Anyway, never going to happen.

http://bitcoincharts.com/markets/mtgoxUSD_depth.html

Scroll down, use the calculator. I got Sell 174000 BTC for 15591452.58 USD

Also, using the gribble (on #bitcoin-otc) command "market sell 174000" it replied:
A market order to sell 174000 bitcoins right now would net 15593348.9834 USD and would take the last price down to 10.2000 USD, resulting in an average price of 89.6169 USD/BTC. | Data vintage: 0.0078 seconds

I feel stupid, I looked at http://bitcoinity.org/markets and 144,000 Bitcoins takes the price on Gox down to $26.

Obviously I am confusing something here?

No. A single dump on a single exchange like MtGox (a stupid thing to do) would bring us roughly around $100/BTC

Over 2 million coins have been sold over the top 3 exchanges in the last 30 days: http://bitcoinity.org/markets/list?currency=ALL&span=30d and yet the exchange rate rose from $130 to $200. So it would be relatively easy for the FBI to sell 174,000 coins on 2-3 exchanges over 30 days and not significantly impact the exchange rate in any way. But most likely they wouldn't even sell on an exchange, they would auction the coins as explained by others.

None. 

If it is anything like the billions of other forfeited assets they will announce ahead of time a day for an auction.  They will auction off the coins and purchasers will wire money TO THE US TREASURY and only then will they send the sold coins. No counterparty risk, no waiting 180 days for MtGox to get their act together, no risk of an exchange getting "hacked" and the US government losing their $20M in BTC.

No possible way the US government using a quasi-illegal Bitcoin exchange.

Al Jazeera weighs in: https://bitcointalksearch.org/topic/2013-10-28-aljazeera-the-fbis-bitcoin-address-320392

I would be interested to know which exchange they will use to cash out.

I think the issue is more around how someone 'well connected' could use the contents of the wallet 'quietly'. As soon as btc started flowing out, people would realise.

Giving them the wallet file and whatever passphrase the private key is encrypted with. That's damn near silent.

+1

The federal government could dispose of the bitcoins by selling them to the Federal Reserve.  The Federal Reserve is certainly in cahoots with the federal government, but technically isn't part of the federal government.

I'd like to see how that could "quietly" happen seeing as it's the most watched Bitcoin address on the network.

Wasn't anyone paying attention to how the apparatchik behaved during the final days of the USSR?

Those bitcoins will quietly end up in the personal wallet of somebody well-connected.

They're required to dispose of seized assets in some way.  These are the Guidelines on how they do that.  They're only guidelines, but based on past behavior and guessing, I'd think they'll auction them off.  I'd hope they wouldn't do the worst possible thing, which would be to dump a giant chunk of them on some exchange, but I don't think they'd even want to mess with that.

I could also see them keeping some chunk of them for sting purchases, perhaps after mixing them first (since even a somewhat dim Bitcoin-accepting illegal vendor might just be suspicious of getting paid in coin directly from seized DPR funds).  The agency itself might have no clue, but there certainly are feds who know enough about Bitcoin to handle it as they have so far.  The question is whether they'll have the sense to listen to them if they suggest this, since it's a good idea.  For example, seized drugs are sometimes used subsequently in sting purchases by some agencies, which might be a good reason to be suspicious of the guy who always has the best drugs and always in whatever quantity wanted immediately.

Generally, though, the agency responsible for seizing the assets is not permitted to keep them, especially if they decide to treat BTC as "cash."  (My guess is they treat it as "personal property" which would give them somewhat more flexibility in what they do with it.)

+1. I think govts around the world will finally realize that Bitcoin can be used to back fiat currencies like other commodities (gold, oil, natural gas, rare-earth elements etc).

I don't think the Fed would dump them on the market.  They would hoard them like they supposedly do with gold in order to remain somewhat solvent when the dollar inevitably collapses.  This seizure could potentially allow them to obtain BTC without causing a large sudden disruption in the exchange rate that would occur if they purchased BTC in the open market.

That is kind of epic.