The nearly 30,000 bitcoins auctioned off by the U.S. Marshals Service last week will be put to use building digital currency businesses outside of the United States.
The bitcoins are part of a massive cache of digital currency seized by the feds in connection with last year’s bust of the Silk Road online drug marketplace. In a first, they were auctioned by the Marshals Service last Friday, but until today, nobody knew who’d purchased them. It turns out that the auction’s winner was venture capitalist Tim Draper, and he’s going to store them with a company he has invested in called Vaurum. The startup sells software and services to international companies that want to set up their own bitcoin exchanges.
“He’s keeping all of the coins—he won the auction independently,” Avish Bhama, Vaurum’s CEO, tells WIRED. “He’s a client of ours so we’re storing and securing them for him. The partnership enables us to offer liquidity to emerging markets by leveraging unique market making strategies across our exchanges.”
Bitcoin is an increasingly popular currency driven by a network of computers spread across the internet. With just 13 million bitcoins in circulation, it can be hard for new companies to buy large chunks of the digital currency without driving prices up. But the arrangement with Draper will help Vaurum provide its clients with easier access to bitcoins. “It’s still quite difficult to get access to bitcoin in these developing economies, Bhama wrote blog post announcing the news, “and that’s exactly where it is needed the most. Our goal is to build reliable infrastructure and increase liquidity, which are two major challenges in the ecosystem.”
Vaurum was founded last year at Boost, a Bay Area tech incubator founded by Tim Draper’s son, Adam Draper.
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