US government puts $18 million in Bitcoin seized from the Silk Road up for sale

The auction will begin on 27 June with bids requiring a deposit of $200,000

The US government has announced the sale of $18 million (£11m) worth of the digital currency bitcoin that were seized during the closure of the Silk Road - ‘the eBay of illegal drugs’ - in 2013.

The 29,656.51306529 bitcoins were taken by the FBI in October last year as part of the arrest of Ross Ulbricht, the 29-year-old computer programmer alleged to have operating the Silk Road under the pseudonym of the Dread Pirate Roberts.

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In a statement announcing the auction, the US Marshals Service said the bitcoins had “resided on Silk Road servers” and that the ­auction did not include any bitcoins “contained in wallet files that resided on certain computer hardware belonging to Ross William Ulbricht."

In order to bid for the items individuals will have to submit a government-issued ID and a $200,000 deposit (to be returned in the event of a failed bid).

The statement specifies that the bid must be “an all cash offer” and that the US Marshals Service will “not sell to any person who is acting on behalf of or in concert with the Silk Road and/or Ross William Ulbricht”.

It’s likely that the bitcoins will be sold to one of the many investment bodies betting on the digital cryptocurrency's long-term future. Despite the egalitarian language that sometimes surrounds Bitcoin, it’s thought that as much as half of the entire currency is in the hands of 0.1 per cent of the total owners.

Bitcoin was first launched in 2009 as a secure and anonymous way of making payments on the web - as well as an alternative to fiat currencies. Some of its early success was linked with that of the Silk Road, a site launched on the internet's 'deep web' in 2011 that gave customers a relatively secure way to buy illegal drugs.

The Silk Road was shut down on 2 October 2013, with Ross William Ulbricht arrested on charges of narcotics trafficking and contracting hit men to kill rivals (none of these resulted in actual deaths). Ulbricht has pled not guilty to the charges.