Uncle Sam's bargain bitcoins

By Ben Munster

The U.S. Marshals Service, the government law enforcement agency that handles seized assets, has seized a lot of bitcoin. But it’s not HODLing its stash or selling it on ShapeShift. It’s calling all bidders to step right up to its bitcoin auction block.

U.S. Marshals plan to auction off 660 bitcoins (worth, at press time, $4.3 million) in six blocks of 100 and one block of 60—to investors, anywhere in the world, on November 4. (For those, at least, who aren’t “associated with terrorism.”) Nice way for Uncle Sam to spin a buck, sure. But a deeply impractical, semi-pointless process for almost everybody else involved.

You might say it’s an opportunity for investors to grab a discounted bitcoin. Indeed, bidders, assuming they’re not morons, are unlikely to place their bids above market price. But the price of bitcoin is liable to drop at any point, so these bargain hunters could risk splashing out more than the bitcoins end up actually being worth. After all, you wouldn’t bid for a painting that might be shredded mid-auction. (Oh wait.)

And if you thought setting up your Binance account was hard, you haven’t had the pleasure of a government-sponsored registration process. Would-be bidders for this bitcoin block party must first manually parse through a legalese-ridden, four-page “Bidder Registration Form.” They must then print, sign, scan, and email the form to USMSBitcoins@usdoj.gov, the flagship email address of the crack Marshals Service bitcoin auctioning squad.

Next, investors have to send a photo of themselves—proof-of-existence, essentially—to the same address. And, to top it off, each bidder must put down a $200,000 deposit to ensure they pay up once they’ve made the winning bid. The whole thing screams “crypto-anarchic dream,” doesn’t it?

It’s unclear why crypto investors would endure filling out a registration form and putting down a $200,000 deposit when they could just buy up a load of bitcoin on Coinbase. Aside from potentially landing some big coin at a big discount, you could perhaps argue it’s a more trustworthy procedure: The government will issue the funds via a wallet, not an exchange, and the transaction will come with all the accoutrements and assurances typical of any high-strung bureaucratic body.

Nevertheless, it’s hard to imagine what kind of person would actually go for this. Surely it’s a slap in the face to those who consider Bitcoin a currency rather than a commodity that can be auctioned off like some kind of Rembrandt. Are there, perhaps, bitcoin hobbyists, digital dilettantes, who see in the bitcoin blockchain’s inscrutable code something comparable in beauty to, say, the Mona Lisa? Will they print out the digital ledger, frame it above the mantelpiece, and excitedly tell guests, “Look! That’s my new bitcoin”?

That’s if their guests aren’t unsettled by the bitcoins’ dark, publicly available past. The second-hand bitcoins the Marshals Service is flogging once belonged to such luminaries as convicted fentanyl trafficker Sky Justin Gornik, convicted money launderer Thomas Mario Constanzo, and convicted “illicit money transmitter” Theresa Tetley. To be fair, most bitcoins have probably been used for at least a teensy bit of, say, heroin smuggling. But it’s weird to know exactly which deplorable once owned it. Imagine paying for your salad niçoise with money that you know was last used to bankroll a fentanyl-trafficking operation.

All in all, it’s a weird, pointless auction. But Godspeed to those who, for whatever obscure reason, opt to take part. Maybe they’ll snag some bitcoins at half price.

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