Tim Draper outspends all other bidders to win the US Marshals' Silk Road bitcoin auction

By Michael Carney , written on July 2, 2014

From The News Desk

We still don’t know the winning bid for the nearly 30,000 Silk Road bitcoins auctioned by the US Marshals Service (USMS) on Monday. But we now know the winner. A day after the USMS revealed that a single bidder won all 10 auctions for the blocks of 3,000 bitcoins each, we’ve learned that Bay Area venture capitalist Tim Draper was the big spender.

The news was revealed in a Medium blog post by developing markets-focused bitcoin trading and storage startup Vaurum. Draper was an investor in the Palo Alto company’s May $4 million seed round, along with Battery Ventures and Steve Case, and will make the newly purchased digital currency available to the company to “provide bitcoin liquidity in emerging markets.”

Vaurum CEO Avish Bhama explains:

We’ve been brainstorming to come up with new ways to help grow global bitcoin adoption, and what we came up with is a way to leverage our exchanges and utilize the auctioned pool of bitcoins, as well as market making strategies, to help provide liquidity in these underserved markets.
Draper offered the following statement via the Vaurum blog:
Bitcoin frees people from trying to operate in a modern market economy with weak currencies. 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.

Of course, no one is totally secure in holding their own country’s currency. We want to enable people to hold and trade bitcoin to secure themselves against weakening currencies. Draper has long been vocal about his belief in bitcoin, and has invested in several companies in the ecosystem. But it’s his eldest son Adam, through his accelerator, who has been the family’s most visible bitcoin enthusiast. Boost announced its first bitcoin-focused class in May 2013 and has since invested in several dozen crypto-currency-related companies, including incubating Vaurum. Adam Draper has also been called to speak in front of Congress and the New York Department of Financial Services on behalf of the bitcoin community.

Tim Draper left his day to day operating role at Draper Fisher Jurvetson in November, moving on from the firm he founded three decades ago in a continuation of the Silicon Valley legacy started by his father. Draper continues to invest out of his personal investment vehicle, Draper Associates, and, when he’s not campaigning to break California into six separate states, is actively involved in his quirky entrepreneurial bootcamp, aptly named Draper University of Heroes,

The Coindesk Bitcoin Price Index currently sits at $649.39, up 2.14 percent on the day and holding relatively level since the close of Monday’s auction. At this value, Draper’s purchase is worth more than $19.2 million. Many unconfirmed rumors indicate that these coins were purchased at a premium to market prices, which at the time hovered around $600. Draper beat out other highly motivated bidders, including SecondMarket, Bitcoin Investment Trust, Coinbase, Circle, Pantera Capital, Bitcoin Shop, Rangeley Capital, and others.

We may never know the exact price paid for the USMS auction but we can now write off many of the conspiracy theories stemming from the earlier lack of transparency. The Silk Road bitcoins are not owned by a shadowy figure intent on tanking the bitcoin market, nor did they go to an entity related to Mt. Gox, accused Silk Road creator Ross Ulbreicht, or the US Government.

The winner was Tim Draper, a man who continues to keep Silicon Valley on its toes and who, despite all his many quirks, may just have the last laugh if bitcoin goes on another widely anticipated price run.

[Image via RodinHoods]