What to do with the bitcoins

Written by Reuters | New York | Updated: Feb 3 2014, 19:08pm hrs
US prosecutors in Manhattan are sitting on a multimillion-dollar bitcoins gold mine. And it could get much bigger.

Federal authorities hauled in 29,655 units of the digital currency worth nearly $27 million at current exchange rates through an official forfeiture by Bitcoin in the past few days. The bitcoins had belonged to Silk Road.

An additional 144,336 bitcoins, worth more than $128 million today, were also discovered, but the governments claim on them is being disputed by Ross Ulbricht.

It all puts authorities in an unusual position, given their concerns about the way in which bitcoins and other digital currencies are used by criminals to circumvent regulations. By trading in bitcoins, the government could give the currency some legitimacy.

The US Marshals Service will have to decide whether to sell the units on a Bitcoin exchange or find a private buyer, perhaps through an auction.

A spokeswoman for Preet Bharara, the US Attorney for New Yorks Southern District, has said the government is still trying to decide what to do with the forfeited bitcoins.

Early last week, two Bitcoin entrepreneurs Charlie Shrem, the chief executive of New York-based BitInstant, and Robert Faiella, known as BTCKing were arrested for allegedly conspiring to sell over $1 million bitcoins to users of Silk Road.