One of the “Big Four” audit firms the multinational financial management service Ernst & Young (EY) is auctioning $16 million worth of bitcoin next month in Sydney, Australia. The 24,518 bitcoins seized by special agencies will make for the country’s first cryptocurrency auction of this magnitude — much like the U.S. Marshals Silk Road auctions in 2015.
Ernst & Young Expects Many Bidders
Ernst & Young will be selling the confiscated cryptocurrency in auction form, allowing bidders to compete for 24 thousand coins in 11 lots of 2,000 BTC. One lot will amount to 2,518 Bitcoins, and the sale will have a 48-hour sealed bidding period on June 20, 2016. Event registration begins June 1-7th and Ernst & Young believes the sale will be popular.
Adam Nikitins, transaction partner at Ernst & Young, said in the announcement:
This current wallet is an extremely large holding of Bitcoin. This will be a pretty hotly contested auction, more competitive than previous auctions because the price volatility has reduced.
There have been no press statements to where the wallet came from when Ernst & Young announced the auction. However, the wallet Australian authorities confiscated most likely came from a Silk Road vendor named Richard Pollard from Melbourne, Victoria. Police raided two of Pollard’s homes in late 2012, and he was sentenced to 11 years of prison in 2014.
Australian officers seized $58,000 in cash, 24,518 bitcoins, 2.8 kilograms of MDMA, and a room full of cannabis plants. Alongside this seizure in 2015, the U.S. Marshals service obtained 144,000 bitcoins from Ross Ulbricht and auctioned off allotments throughout the year.
Ernst & Young expects a good outcome for the auction with venture capitalists, exchanges, and hedge funds to bid on the cryptocurrency. The firm says bidders will go through a “rigorous registration process,” and most of them will come from North America and Europe.
There will also be a substantial deposit to get in on the auction. “Given the quantum of Bitcoin that are going to the market, we want to make sure that people can complete the transaction,” Nikitins said.
The sale will be held off-market so the coins can be liquidated without hurting exchange rates. Nikitins details the off-market procedure:
If you go through the process of putting them through public exchanges, the significant sell order would push the price down. Not too dissimilar if you were to move a whole lot of BHP or Apple shares.
Nikitins also feels that there will be corporate entities bidding, as well as people representing other parties. The multinational company wants to get a firm grasp on who they are dealing with when it comes to the bidders registering.
Nikitins explains that identification will be required to participate in the auction.
“If it’s body corporates that are bidding, and we expect many will be, the details of those individuals controlling those body corporates will be known to us,” he said. “It is crucial we are comfortable with the counter-parties with whom we are transacting.”
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