The United States Justice Department has finally claimed proceeds from the sale of 144,336 bitcoins in 2014 and 2015 after they were seized from Silk Road.
With the department announcing that “United States District Judge Katherine Forrest entered a Stipulation and Order today in which Ulbricht withdrew his claim to the Proceeds, and the Proceeds were forfeited to the United States.”
It took some years for them to finally get their hands on the money, but still faster than the 200,000 MT Gox coins which remain stuck within the bankruptcy process.
However, those gox coins remain in bitcoin, while the department’s coins were turned into fiat, with that 144,336 bitcoin sold for just $50 million at an average price of $334 per btc.
During that 2-3 years, the dollar’s value has considerably fallen in comparison to bitcoin, with that 144,336 btc now worth some $600 million.
Magnitudes more than the price they were sold for by bureaucrats who clearly didn’t think of waiting until the legal ownership status of the btc was established before selling them.
But, for every loser there’s a winner and in this case it is undoubtedly Tim Draper who scooped up many of those very clean and very cheap coins.
Although it is not clear whether he had hands of steel and held to them while bitcoin went through its bear market in 2014-15 to a low of nearly $150.
If he did, his investment is now worth 10x more than when he bought them and that’s all in just 2 years. Not a bad purchase at all, but doubtful US taxpayers are happy about a pretty bad sale.
Nor is it clear whether this money will now go back to the US taxpayers as a refund of sorts (yeah right). Or whether the Justice Department will instead buy some cool new toys and lambos with their $50 million.
But what we can be sure of is that no one will be fired over what now appears to have clearly been a very bad decision. Costing taxpayers $550 million in value.
They could have cost averaged and engaged in the sale far more slowly, rather than rushing it all to market as if there was any hurry considering they had not yet even established their legal right to the ownership of the proceeds.
A rush to sell which itself probably contributed to the fall in value at the time that gave them a mere 10% of it’s current value. And yes, in a different timeline it could have been a different story, but it is basic demand and supply 101 that when you sell 20,000 btc in one go, rather than say 2,000, price will probably fall more and will do so somewhat temporarily or artificially.
So forgive us for thinking maybe they were grinding their teeth wanting it to fall in value, but unfortunately their desires have only led to taxpayers being some 90% worse off.
And yet, not one question will be raised, not one investigation will be carried out over what we can now say was a terrible decision. But they still will come and ask ICOs to comply with license requirements and will still apply one rule for the rich and another for the rest as if bureaucrats are better at judging risk or extracting maximum value than the free market.