This is a commentary by Daniel Friedberg of Riddell Williams.
Bitcoins seized in connection with drug trafficking were auctioned by the authorities on June 27. The auction took place on June 27 from 6:00 to 18:00. EDT. The property was sold in nine blocks of 3,000 bitcoins and a block of about 2,656 bitcoins, for a total of about 29,657 bitcoins.
The winning bidder will receive a United States Marshals Service signed sales contract for the transfer of bitcoins. By such an act of sale, the United States will confirm by its actions that bitcoin can be sold to the general public, thus ultimately endorsing the concept of bitcoin fungibility, even if, ironically, on its own behalf.
This historical transaction is cited as evidence that a sale of bitcoin does not constitute a sale of securities under federal law.
The bitcoin apparently will not be sold by the US Marshal in a registered securities offer, or that is expressly exempted from registration, as the auction has been publicly announced without the required standard contract clauses. Concerns that the SEC might take the position that Bitcoin constitutes "security" are not consistent with the terms and conditions proposed by the federal government. It should be noted that auctioned bitcoin is freely negotiable by the buyer, with no resale restrictions that would generally be required after the sale of non-registered securities.
The auction comes on the heels of the IRS advice regarding the taxation of bitcoin transactions. It seems that the US government has finally agreed that there will be no stop to bitcoin sales anytime soon.