The Bitcoin community is responding to the auction of seized Silk Road coins by moving money into LiteCoin and other alternative coins. The government agencies selling seized coins are seen to be "dumping" them on the market in an effort to suppress the internet currency and it is has sparked outrage. Instead of allowing the government agencies to profit, the community is taking action by moving money via exchanges around the world. The money is being put into so-called "alt coins", led by the second largest cryptocurrency, LiteCoin.
Thus far the Bitcoin fell from $648.89 to $560, with a rebound to $589 as of posting of this article. If this campaign takes hold you might expect further reductions in price, accompanied by increases in LiteCoin and other cryptocurrencies.
Social media hubs like twitter and reddit, alongside bitcoin community forums and exchange chat areas are being used to organize the movement. Hashtags include:
BackgroundU.S. Civil Asset forfeiture law allows departments that seize cash and other assets to use it for various expenses. This is incentive for the law enforcement agencies to sell assets or spend seized cash, but without the rigor of traditional due process. For instance, if you are a U.S. citizen carrying $10,000 in cash, it must be declared or it is subject to seizure. If seized, you must prove that it is yours and how you earned it. The legal system may not be impartial in the process because it can use the cash.
"80% of people whose property was seized by the federal government were never charged with a crime. Forfeiture proceedings are brought not against people, but against property that law enforcement need only allege is connected to criminal activity. "Silk Road bitcoins were seized by the U.S. Marshals Service from servers and 29,656 ($17,793,600) are to be auctioned. These coins are to be sold on June 27th over a 12-hour period to anyone willing to put up $200,000 as a deposit. Additionally, 144,341 ($86,604,600) bitcoins were seized from "Dread Pirate Roberts" or Ross William Ulbricht, the operator of Silk Road. Until recently, these coins were not available for law enforcement to sell on the market because they were unable to crack the encrypted password protection. Bitcoin proponents have pointed to this as proof that bitcoin is more secure than assets held in banks. Mr. Ulbricht apparently gave up this password as the coins have recently been moved into a new wallet.
All bitcoin transactions are tracked automatically via the blockchain, so we can view the two accounts which held the Silk Road seized coins. DPR Seized Coins were moved to DPR Seized Coins 2 on July 12, 2014 in an apparent "shot over the bow" of the bitcoin community by the U.S. Government. Unfortunately the bureaucrats failed to realized that this warning shot might have consequences.
Money for fleets of shiny new government vehicles, huge salary bonuses and bloated expense accounts may now evaporate when the government attempts to cash in. Undoubtedly, some government social media workers will then begin pushing a narrative that bitcoin is "unstable" as they did after someone sold down the price of bitcoin to $102, likely due to a trading glitch. However, the price rebounded in minutes after that incident, which is not widely reported. The #MoveToLiteCoin campaign intends for the price of bitcoin to resume it's epic rise when the alt coin money returns.
Some of the coins being used as repositories of crypto-wealth include: Litecoin, NameCoin, DogeCoin