Venture capitalist Tim Draper has revealed that he is the investor who snapped up nearly 30,000 Bitcoins seized from shut-down online drugs market Silk Road, having outbid all comers in an auction held by the US Marshals Service last week.
The 29,656.51306529 Bitcoins nabbed from Silk Road's digital wallets were auctioned off as part of a civil forfeiture procedure while Ross Ulbricht, the alleged founder of the darknet drug-sales souk, awaits trial on narcotics trafficking, money laundering, and other charges.
Draper emerged as the top bidder in the auction in a Wednesday blog post by Bitcoin trading infrastructure firm Vaurum, in which Draper was an early investor.
In a joint statement, Draper and Vaurum said they plan to use the Bitcoin hoard as a way to offer security and liquidity to investors living in countries where the local currency is weak.
"Of course, no one is totally secure in holding their own country’s currency," Draper said. "We want to enable people to hold and trade bitcoin to secure themselves against weakening currencies."
If you're not seeing it, then frankly neither is El Reg. The tribulations of foreign currency markets aside, Bitcoin itself is highly volatile, with the price of a single Bitcoin having ranged from under $100 to over $1,000 and back down again, in just the last year alone.
But then, this isn't the first unlikely idea to which Draper has hitched his wagon. Earlier this year, the venture capitalist floated a ballot initiative that would split California into six separate states.
Under Draper's proposal, the San Francisco Bay Area and the rich counties of the state's central coast would be grouped into a new state known as Silicon Valley, Los Angeles and some other coastal regions would become West California, and the comparatively agrarian (and poorer) territories to the north, south, and east would be jettisoned to fend for themselves.
But although many Californians may give grumbling assent to Draper's assertion that the state in its current form is "ungovernable," his initiative has gained little traction among voters, and nobody in the higher levels of government takes it seriously. Absent any other barriers, dividing California into six states would mean the region would gain ten new Senators, while presently it has but two.
Like his "Split California" proposal, however, Draper is apparently dead serious about his plan to use Bitcoins as a hedge against failing currencies. He reportedly won the US Marshals auction alone, using his own money, and he outbid every other participant, including various finance firms and Bitcoin startups.
In a canned statement, Vaurum CEO Avish Bhama said: "Many thanks to the United States Marshals Service for their facilitation of the auction. We’re excited about the opportunity to put these coins to good use and are looking forward to working with Tim in such a unique way." ®