Another Bitcoin Auction to Be Held by U.S. Marshals

The United States Marshals Service announced on Monday that it would auction 50,000 Bitcoins, worth around $19 million, seized in connection with the now-defunct online bazaar Silk Road.

The auction, scheduled for Dec. 4, comes about five months after the Marshals Service’s first Bitcoin auction, when it sold nearly 30,000 of the Bitcoins seized from Silk Road, which was shut down in October 2013 after authorities said it was online marketplace for illegal drugs and other illicit activities.

The latest auction is for Bitcoins found on computer hardware belonging to Ross Ulbricht, who is accused of creating Silk Road. Prosecutors and Mr.Ulbricht agreed in January that the government could sell the virtual currency it had seized.

Bidders in the government’s second Bitcoin auction will have a six-hour window on Dec. 4 to submit a sealed bid for the coins, which have been broken into several lots. The first series contains 10 blocks of 2,000 Bitcoins, while the second series contains 10 blocks of 3,000 Bitcoins. Bidders can participate in both series and can bid on multiple blocks.

Registration for interested parties to participate in the auction began on Monday at 9 a.m. and will end at noon on Dec. 1. The Marshals Service will notify eligible bidders on Dec. 2, with the winner, or winners, notified on Dec. 5.

As was the case before the first auction, bidders must prove their identities and that they have a required amount in cash. They also have to certify that they are not affiliated with Silk Road or Mr. Ulbricht.

The government’s two auctions represent only a small fraction of the total amount of Bitcoin seized in connection with Silk Road. Including 144,336 Bitcoin found on computer hardware belonging to Mr. Ulbricht, the government has recovered 173,991 Bitcoins. A spokeswoman for the Marshals Service, Lynzey Donahue, said in an email that the agency anticipated selling the remaining Bitcoins “in the coming months,” but that “no exact dates have been determined.”

The Marshals Service’s first Bitcoin auction, held at the end of June, was not without a few hiccups. The agency, which had said it would not release any information about the bidders or winning bids, accidentally released a list of potential bidders before the auction. The mistake made some recipients of the message uneasy and spurred questions about the agency’s ability to handle the virtual currency. Potential bidders also criticized the agency for what it said was a process that sometimes lacked transparency.

For the most part, experts excused the slip-ups, saying the agency was figuring out how to auction Bitcoin, which was so unlike the hard assets, like cars and jewelry, typically auctions by the federal government.

Before the first auction, investors and analysts were also wary that auctioning such a large amount of Bitcoin, which represented a substantial percentage of the average daily trading volume, would push the price of the virtual currency down.

That anxiety proved unfounded, though the price of Bitcoin has since declined. It is now trading at about $380, according to CoinDesk, down from about $570 when the first auction began.

The Marshals Service’s first auction was generally regarded as a success, attracting the attention of a number of prominent technology names, including Barry Silbert of SecondMarket, Pantera Bitcoin and Coinbase. The venture capitalist Tim Draper was the auction’s sole winner, taking home Bitcoin worth about $19 million at the time. Many in the Bitcoin world pointed to the widespread interest in the auction as a sign that the virtual currency was moving further into the mainstream, beyond the realm of anti-establishment enthusiasts and technology geeks.

The government’s second auction comes as Bitcoin appears to be at a pivotal point in its development. Venture capital money has poured into Bitcoin-related start-ups recently, even as some in the industry say the virtual currency is losing a bit of its luster. For one, potential competition from the likes of Apple Pay and other mobile payment options have caused a bit of consternation. Others say they are still waiting for Bitcoin to reach its full potential as a system for transferring value across the world, rather than simply a virtual currency.

The case against Mr. Ulbricht, which was scheduled to begin this month, has been postponed until January.