EY Auction of Seized Bitcoins Worth $13m Points to Silk Road

UK-headquartered multinational professional services firm Ernst & Young (EY) has been hired by one of its clients to help auction 24518 confiscated bitcoins in Sydney, after the lot was seized by authorities as proceeds related to crime, with an estimated value of just over $13 million at today’s rate, according to an EY statement on the planned sale.

EY said the auction is also open to bidders outside of Australia, and expected interest from currency exchanges, asset managers, and other market participants such as investment banks and hedge funds, as highlighted by Reuters' coverage of the news this Monday.

The auction is expected to take place on June 20^th through the 21^st, according to EY. The news follows last Friday’s multi-year high where a rally in the price of BTC lifted it to $530, which, if sustained, will help add further value to the planned auction price, or see it discounted.

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Silk Road connection?

Finance Magnates had written about local media reports of an Australian man named Richard Pollard who was convicted of drug trafficking in 2014 with ties to Silk Road.

He reportedly had the same number of bitcoins confiscated from him, seized along with a room full of cannabis and other drugs in connection with the crime that got him a prison sentence of over a decade.

While there is no direct statement from either EY or local authorities at this time confirming any connection to the above-related seizure, it is either likely to be the same lot or merely just a coincidence with the confiscated wallet holding the same number of bitcoins.

Over the last two years in there have been over 170,000 confiscated bitcoins auctioned off in the United States in connection with the closure of Silk Road, which operated as a black market that wasn’t subject to any anti-money laundering (AML) or regulatory oversight controls, and which used cryptocurrency to avoid detection.

Fraud, and cybersecurity

The use of the cryptocurrency also aided Silk Road's demise, as its electronic transactions remain a permanent part of the cryptocurrencies' electronic ledger or history.

Blockchain and distributed ledger systems are becoming exponentially more appealing for industries to use - for a multitude of reasons - including to detect and avert fraud by making it more difficult for perpetrators and easier to catch them.

Challenges and opportunities

However, there still continues to be bitcoin heists and thefts taking place, as unauthorized access into distributed networks - by someone with the knowledge to modify the system further - can help temporarily corrupt it for enough time for thieves to make away with cryptocurrency before being stopped.

In addition, Bitcoin wallet keys and passwords have been also stolen by fraudsters and used to empty out wallets of victims who've lost their cryptocurrency due to either their own security mistakes or problems still collectively plaguing the cryptocurrency industry.

For these reasons, cyber-security remains at the forefront of regulators' concerns amid the growing prospects for Blockchain coupled with recent developments such as the New York Fed bank heist by hackers in Bangladesh.

The daily chart below of BTC/USD shows a medium term bullish channel highlighted as well as last Wednesday's breakout of a short-term bearish resistance line that helped lead to the subsequent surge to last Friday's high: