The US govt’s bitcoin bonanza, how, where and when to sell?

The US govt’s bitcoin bonanza, how, where and when to sell?

The US govt’s bitcoin bonanza, how, where and when to sell?

Posted: 19 Jan 2014 08:09 AM PST

NEW YORK: US prosecutors in Manhattan are sitting on a multimillion-dollar bitcoin gold mine. And it could get much bigger.

Federal authorities hauled in 29,655 units of the digital currency – worth US$27 million at current exchange rates – through an official forfeiture by Bitcoin this week.

The bitcoins had belonged to Silk Road, an anonymous online black market that authorities say was a conduit for purchases of drugs and computer hacking services – even a place where assassins may have advertised. It was shuttered after an FBI raid in September, when agents took control of its server and arrested the man they say was its founder in San Francisco.

No one stepped forward to claim these bitcoins, which were found in electronic 'wallets' used to store the digital currency.

An additional 144,336 bitcoins, worth more than US$128 million today, were also discovered, but the government's claim on them is being disputed by Ross William Ulbricht, 29, who US authorities say was the founder and main operator of Silk Road. They had been stashed on his laptop.

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 intended to prevent money laundering. By trading in bitcoins, the government could give the currency some legitimacy.

Bitcoin is essentially software code that defines units of value, which users can move back and forth among themselves.

Unlike other virtual money transmitters, its value is not pegged to a hard currency like the dollar or the euro; it is determined by the demand for bitcoins.

The US Marshals Service, which is in charge of liquidating such seized assets, 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 York's Southern District, said Friday that the government is still trying to decide what to do with the forfeited bitcoins.

The timing of any sale could make a big difference in the amount the government could realize.

Bitcoin's value has fluctuated wildly over the past six months. When Silk Road was seized, the bitcoins found on the server were worth US$3.6 million, far below their current US$27 million value. Friday's exchange rate was about US$900 per bitcoin, according to the Tokyo-based Bitcoin exchange MtGox.

It is unclear whether a large sale of bitcoins by the government could drive down the price. Friday's volume on MtGox, which is the largest Bitcoin exchange, was 8,656 units.

"If it's worth US$27 million now, is that a high part of the market? A low part of the market? That's one of the decisions they're going to have to make," said Louis Rulli, a professor at the University of Pennsylvania Law School.

"It would seem to me that they would probably convert those bitcoins into cash relatively quickly."

Barry Silbert, the founder of one of the first investment funds that lets retail investors gain exposure to Bitcoin, declined to offer an opinion on what the government should do with its stash or how a sale would affect the market.

Marco Santori, chairman of the regulatory affairs committee for the Bitcoin Foundation, which is Bitcoin's official trade group, said the group did not have an official position on the matter.

Most goods seized by US authorities end up in the hands of the US Marshals, where they are auctioned or, at times, repurposed for government use. But the Marshals aren't just practiced at unloading forfeited SUVs or houses; they also deal with complex financial instruments, foreign companies and other kinds of obscure assets forfeited by criminals. — Reuters

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China pledges progress on currency reforms in new FTZ

Posted: 19 Jan 2014 08:08 AM PST

SHANGHAI: Shanghai's mayor yesterday pledged to make major progress this year on key financial reforms in the city's new free-trade zone (FTZ) including full convertibility of China's currency.

China set up the FTZ in the commercial hub in September last year, promising to make the zone a showcase for financial reforms, which have slowed over the last decade.

"We will make all-out efforts to build the FTZ," mayor Yang Xiong told lawmakers at the annual meeting of the city's legislature.

"To intensify opening up and innovation in the financial sector … we will seek substantive progress with pilot reforms," he said in a speech.

He said these reforms included convertibility of the yuan  currency under the capital account, cross-border settlement of the yuan and interest rate liberalisation.

China keeps a tight grip on its capital account — investment and financial transactions, rather than those related to trade — on worries that unpredictable inflows or outflows could harm the economy and reduce its control over it.

Convertibility of the yuan — allowing the currency to be freely bought and sold, and with it the movement of funds into and out of China — is the main obstacle preventing Shanghai from competing with global financial centres such as New York and London.

China currently sets deposit rates by administrative order, but the central bank began allowing banks to decide their own lending rates last year, in a long-awaited move.

Yang said the government would also revise a 'negative list' of what is barred in the FTZ in a timely way.

The list was sharply criticised for being too long and restrictive and officials say a new one will be announced for this year.

Shanghai would also work towards the launch of crude oil futures, Yang said, but gave no launch date.

Officials have previously said the futures product would be offered through the FTZ.

Shanghai also planned to 'gear up' for the start of operations of a new Disney theme park in the city, Yang said.

City officials earlier this month reaffirmed a deadline for the opening of the park to visitors in 2015.

The park will be the second in China after another in its special administrative region of Hong Kong. — AFP

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Fourth casualty from capsized boat incident found

Posted: 19 Jan 2014 01:18 AM PST

Posted on January 19, 2014, Sunday

DARO: The body of a fourth victim – Norsiah Abdullah, 40 – was found at 2.56pm by the Search and Rescue (SAR) team not far from Kampung Kut, the site where the longboat the wedding entourage travelled in capsized at 1.40pm yesterday.

Seven passengers are still missing.

The remains of the three other victims were flown in from Daro to Kampung Tekajong by helicopter earlier today.

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Insiden bot karam: Mayat mangsa keempat dijumpai

Posted: 19 Jan 2014 12:56 AM PST

Posted on January 19, 2014, Sunday

DARO: Seorang lagi mangsa dijumpai pada jam 2.56 petang oleh pasukan mencari dan menyelamat tidak jauh dari lokasi kejadian di perairan Kampung Kut.

Mangsa keempat yang ditemui dalam insiden membabitkan 27 orang pada kira-kira jam 1.40 tengah hari semalam itu dikenali sebagai Norsiah Abdullah berusia 40 tahun.

Tujuh lagi mangsa belum dijumpai.

Sementara itu, jenazah tiga mangsa yang dijumpai semalam telah diterbangkan menggunakan heklikopter nuri dari Daro ke Kampung Tekajong tengah hari tadi.

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