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SecondMarket: Syndicate Bidders Real Winners of Bitcoin . Secondmarket bitcoin auction

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The US Marshals Service (USMS) confirmed today that a bidding syndicate organised by Bitcoin Investment Trust (BIT) and the trading division of SecondMarket took 48,000 BTC in its second bitcoin auction.

The 48,000 BTC (worth roughly $16.9m at press time) is the largest ever won in a USMS bitcoin auction, trumping the nearly 30,000 BTC won by venture capitalist Tim Draper this June. In total, SecondMarket and BIT secured 19 of the 20 bitcoin blocks put up for bid, while the remaining block was claimed by Draper.

Speaking to CoinDesk, SecondMarket managing director Brendan O’Connor expressed his excitement about the news given the work that went in to assembling the 104-person syndicate.

O'Connor said:

“When you put a lot of effort into something like this you want to win, you want to be able to bear some fruit and show some results. For all the folks internally that spent a lot of time and effort on this it was a very good conclusion.”

SecondMarket itself was not a bidder in its own syndicate, however, he confirmed, meaning none of the 48,000 BTC will be used by the illiquid asset exchange or as part of BIT, its open-ended bitcoin-only trust.

“The bitcoin was won by the participants in the syndicate," O'Connor said. "We were not purchasing any of it.”

The auction winners were notified of the outcome on 5th December. SecondMarket came forward with its announcement earlier today, having distributed all of the 48,000 BTC to the winners in the syndicate over the weekend, O’Connor said.

SecondMarket declined to comment on the price of the takings or the members of the syndicate.

Access to interested bidders

Although SecondMarket won't hold any of the winning bitcoin, O’Connor said the firm’s interest in participating was motivated by the need to provide an outlet for others to participate but skip the tiresome authorization process.

“[It was] for folks out there that wanted to participate in having a chance to win some fairly large blocks of bitcoin that do not come to the market all that frequently without having to go through the trouble of actually going through the approval process with the USMS,” he said.

The syndicate model opened the USMS auction to a wider range of foreign and domestic investors, as well as smaller investors who wanted to bid but could not meet the required $100,000 minimum deposit necessary.

"You have to kind of pass muster from a variety of different perspectives and it requires a lot of time and effort to become an approved bidder in the auction," O'Connor said.

SecondMarket received 104 bids and the BTC quantity bid was 124,127, adding that it was “basically two and a half times the subscription”.

US holiday distractions

When asked about the decline in registered bidders between this auction and the previous one held in July, O’Connor surmised the Thanksgiving holiday in the US might have played a part.

“I’m not 100% sure why they continue to target major holiday times,” he said. “Last time they did this was around the 4th of July and this time it was around Thanksgiving, so its tough to really say.”

A USMS spokesperson has claimed that the timing of the auctions is planned to avoid market disruption. Nevertheless O’Connor said the drop in auction participation is no indication of more bearish attitudes, as bidders needed to place competitive bids to edge out the competition.

He concluded:

“I think you had a lot of very serious folks come to the table that had a strong interest in participating and are very bullish on bitcoin in general. That I think is a very serious statement to say.”

Image via SecondMarket

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SecondMarket Pantera outbid in bitcoin auction

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Barry Silbert, who runs the Bitcoin Investment Trust fund. Bitcoin traded below $350 Tuesday, down from $1,150 a year ago.Credit Michael Nagle for The New York Times

Updated, 8:19 p.m. | The Bitcoin frenzy appears to be fading. But an upstart exchange made a big bet last week that the virtual currency still held promise as an investment.

The exchange, SecondMarket, which is based in New York, nearly swept the government’s latest Bitcoin auction, winning 48,000 of the 50,000 Bitcoins for sale. The exchange’s syndicate, which received 104 bids from eight parties, won 19 of the auction’s 20 Bitcoin blocks.

“Obviously, we’re very thrilled with the results,” said Brendan O’Connor, the managing director of trading at SecondMarket. SecondMarket was started in 2004 by Barry E. Silbert, who runs the Bitcoin Investment Trust investment fund.

The venture capitalist Timothy C. Draper, who won all of the nearly 30,000 Bitcoins in the United States Marshals Service’s first auction in June, said last Friday that he had won only 2,000 Bitcoins in last week’s auction. Mr. Draper bid on behalf of his venture firm, Draper Associates.

The Marshals Service confirmed on Tuesday that SecondMarket had won 48,000 Bitcoins and that the transfer of the coins was completed on Monday.

The auction last Thursday of 50,000 Bitcoins, worth about $19 million, was the second by the Marshals Service for Bitcoins seized in connection with Silk Road, the defunct online bazaar. In June, it sold nearly 30,000 Bitcoins seized from Silk Road, which was shut down in October 2013 after the authorities said it was an online marketplace for illegal drugs and other illicit activities.

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A number of other prominent Bitcoin players, including Pantera Capital and Mirror, previously called Vaurum, also participated in last week’s auction.

Still, the latest sale raised questions about whether the appetite for Bitcoin among investors was subsiding.

The Marshals Service said last week that only 11 bidders participated in Thursday’s auction, a sharp decrease from the first auction, when 45 bidders took part. The service received 27 unique bids this time, compared with 63 in June.

And at the time of the second auction, Bitcoin was trading at about $370, down from its peak of about $1,150 a year ago and about $200 below its price at the start of the first auction in June, according to CoinDesk’s Bitcoin Price Index. It was trading just below $350 on Tuesday morning.

“The demand is starting to dry up,” said David L. Yermack, a professor of finance at New York University’s Stern School of Business. “I think a lot of the excitement may have bled out of investors.”

Bitcoin’s wild price fluctuations, which analysts had said were driven partly by speculative trading, have all but disappeared in recent months. This price stability, in turn, might have further discouraged opportunistic, short-term investors from participating in the auction, Mr. Yermack said.

Others in the Bitcoin industry, however, dismissed the notion that the virtual currency was no longer an attractive investment. Instead, they said, the fact that fewer bidders participated in the second auction was a sign that the Bitcoin market was becoming more liquid.

“Volumes have picked up, so there are other ways to get larger trades relatively easily,” said Garrick Hileman, an economic historian at the London School of Economics who studies alternative currencies. “The Bitcoin market has matured.”

The government’s two auctions represent only a small portion of the total amount of Bitcoins seized in connection with Silk Road. The government has recovered 173,991 Bitcoins, including 144,336 found on computer hardware belonging to Ross Ulbricht, who is said to have created Silk Road.

Lynzey Donahue, a spokeswoman for the Marshals Service, said by email at the time the second auction was announced that the agency anticipated selling the remaining Bitcoins “in the coming months,” but that “no exact dates have been determined.”

The promise of at least one more auction, however, has some in the Bitcoin industry worried. “Bitcoin is in a bit of a holding pattern, or a bit of a lull, and people may think that there’s more downward pressure on the price,” said Mr. Hileman, the economic historian. “Now, we’re onto the harsh reality of who wants to buy into another auction.”

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Announcement in bitcoin sale seen later today - US .

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 evening.

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 Marshals Service.

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 results.

“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.

“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 Diane Craft

Our Standards:The Thomson Reuters Trust Principles.

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Bitcoin Trust SecondMarket BTC Trading Desk to Bid in U.S .

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 supply increased the demand for bitcoins and now the price was higher than when the auction was announced.' - Dan Morehead, CEO, Pantera Capital

"The point is when this auction was announced, bitcoin was trading at $634 US 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 evening.

A spokeswoman for the U.S. Marshals Service said on Monday the 12-hour auction for about $17.7 million US 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 Marshals Service.

Bitcoin prices up almost 7%

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 per cent on Monday at $639.32 US, according to the digital currency exchange CoinDesk. The currency's price rose late in the afternoon in advance of expectations for the sale's results.

"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.

"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.

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