Pantera outbid in bitcoin auction
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[July 01, 2014]
By Gertrude Chavez-Dreyfuss
NEW YORK (Reuters) -
SecondMarket and U.S. investment firm Pantera Capital,
two of the more prominent bidders in the U.S. Marshals
bitcoin auction, on Monday said they were outbid in
their attempts to buy some of the nearly 30,000 coins
sold late last week.
The rejection of two of the biggest names in the bitcoin industry is
a potentially encouraging sign for the long-term prospects of the
crypto-currency because this means the auction drew a lot of
interest from other institutional as well as new investors.
Pantera Capital chief executive officer Dan Morehead told Reuters
the firm was not able to purchase the bitcoins because their bid was
below the market price.
"The point is when this auction was announced, bitcoin was trading
at $634 and the general view was that the supply would take the
price down," Morehead said.
"But ultimately, the supply increased the demand for bitcoins and
now the price was higher than when the auction was announced."
On Friday, the U.S. Marshals Service auctioned off about 30,000
bitcoins seized during a raid on Silk Road, an Internet black-market
bazaar where authorities say illegal drugs and other goods could be
bought. The Marshals Service said it was notifying winners on Monday
A spokeswoman for the U.S. Marshals Service said on Monday the
12-hour auction for about $17.7 million in bitcoin drew 45
registered bidders and received 63 bids but would not disclose the
bidding price of the coins.
"The award process is ongoing, and we will have no further
announcements today," said Lynzey Donahue, a spokeswoman for the
Barry Silbert, founder and chief executive officer of SecondMarket
Holdings, which runs a bitcoin investment platform, confirmed in an
email to Reuters on Monday that he tweeted earlier his firm had been
outbid for the bitcoin auction on all blocks. Silbert had made no
secret of his desire to bid in the auction, so his firm being outbid
suggested interest was likely strong.
Bitcoin prices were up 6.8 percent on Monday at $639.32, according
to the digital currency exchange CoinDesk. The currency's price rose
late in the afternoon in advance of expectations for the sale's
"The bitcoins that were auctioned off would be in good hands," said
George Samman, chief operating officer, at BTC.sx, a bitcoin
derivatives trading platform.
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"The investors will provide the stability to the industry and reduce
volatility in the market. These people will probably hold the
bitcoin over the long haul and that's good for the industry."
Bitcoin is a virtual currency that has gained a following but also
has come under scrutiny due to scams related to virtual currencies.
However, its acceptance has grown, with satellite operator Dish and
online travel agency Expedia recently saying they would accept
payment in bitcoin.
Among those who said they registered to participate in the auctions
were Bitcoin Shop Inc. and Coinbase. Both declined to comment.
Silbert had attracted a group of investors interested in getting a
share of the bitcoin auction by offering lower bid sizes and a
reduced upfront commitment. In a tweet last week he said he received
186 bids from 42 bidders.
Silk Road was shut after an FBI raid in September 2013 as agents
took control of its server and arrested a Texas man, Ross Ulbricht,
that the authorities said owned and operated the website. The
auction was for 29,655 bitcoins contained in files residing on its
servers, which were forfeited in January.
(Reporting by Gertrude Chavez-Dreyfuss and David Gaffen; Editing by
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