Draper snaps up Silk Road bitcoins

Washington - Venture capitalist Tim Draper was the single winning bidder for a cache of bitcoins at a US government auction, part of a larger pool of the virtual currency seized from the Silk Road website.

Draper, the co-founder of investment firm Draper Fisher Jurvetson, will work with start-up Vaurum to help provide access to bitcoins in developing economies and use the 30 000 bitcoins won in the auction as a source of liquidity, according to a statement that Vaurum posted on Medium yesterday.

Timothy Draper of Draper Fisher Jurvetson. Photo: Reuters. Credit: Reuters

“Bitcoin frees people from trying to operate in a modern market economy with weak currencies,” Draper said. “With the help of Vaurum and this newly purchased bitcoin, we expect to be able to create new services that can provide liquidity and confidence to markets that have been hamstrung by weak currencies.”

The auction attracted 45 bidders, including New York brokerage SecondMarket, and 63 bids were submitted during the 12 hours of the sale last Friday, according to the US Marshals Service. The agency, which did not disclose the winner’s identity, notified the bidder and transferred the money.

The auction of 29 656 bitcoins, part of more than 144 000 the FBI transferred to US marshals after closing the Silk Road marketplace and arresting its operator last year, represented a rare opportunity to secure a large cache of the virtual unit.

While the actual price of the winning bid is not known, the cache sold on Monday was worth $19 million (R203m) at current exchange prices.

Vaurum is a California-based start-up that enables firms like banks and brokerages to trade and store bitcoins on behalf of clients. Vaurum has started trading platforms in emerging markets where it is difficult to get access to bitcoins. The group is initially targeting India, Brazil, Argentina and Turkey. – Bloomberg