Tim Draper, a prominent investor in Silicon Valley, is the bidder who bought the government's entire stash of nearly 30,000 bitcoins seized from the defunct online drug market Silk Road, a business partner revealed Wednesday.
Draper, who purchased 29,656 bitcoins from the US Marshals in an auction last week, is working with Bitcoin exchange Vaurum to help emerging markets by leveraging his new reserve of digital currency, according to a blog post by Vaurum CEO Avish Bhama. Draper, co-founder of Silicon Valley venture firm Draper Fisher Jurvetson, was in the spotlight recently due to his campaign to turn California into six separate states.
Bhama offered a statement from Draper in his post:
"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."
Bhama said Draper and Vaurum want to help these fledgling markets establish a stable economy for Bitcoin, a digital cryptocurrency that has risen in popularity and value in recent years. While it can be used like other currencies, Bitcoin is not subject to the same transaction fees or bank regulations.
"It's still quite difficult to get access to bitcoin in these developing economies -- and that's exactly where it is needed the most," Bhama wrote in his post.
The value of a single bitcoin is around $650 as of Wednesday, meaning Draper's new hoard of digital currency is worth almost $20 million.
The pool of bitcoins Draper purchased came from a government seizure of the online drug market Silk Road, which was shut down last fall. Interested bidders registered for the 12-hour auction by making wire transfers of $200,000 to government banks. While the US Marshals announced the sale of the bitcoins to a single bidder, it did not share the identity of the bidder. Draper was not one of the interested bidders named on a list accidentally leaked by the service shortly before the auction.