Parent was probably implying that the Secret Service would sieze the tainted assets and the auction them off to new bidders, thus removing the taint for the new owner. the reason for the auction instead of just funding the treasury is that the USG deals in dollars, not in securities or other obligations or paper instrumnets. Compare the actions of the US Marshalls after siezing the Silk Road Bitcoins.

Wouldn't the auction of stablecoins basically have to be at face value? Just by market forces: You don't auction dollars.

Then they'd just cash then in at coinbase, right?

> Wouldn't the auction of stablecoins basically have to be at face value?

Almost certainly not. They would trade at a premium or discount, depending on a number of factors.

Which factors? Who'd buy them at a premium? Wouldn't any auction of >1 bidders stabilize at face value?

> Which factors? Who'd buy them at a premium? Wouldn't any auction of >1 bidders stabilize at face value?

Think of the stablecoin as an ETF. If people need to launder money or take advantage of a programmatic bug, that would raise the stablecoin price over $1.

By default, I'd imagine the reduced liquidity and counterparty risk (relative to dollars) would cause the stablecoin to trade at a discount to cash, particularly when auctioned by the government. (You have to spend resources monitoring the auction, closing the transaction, and cashing out to complete the arbitrage.)

That doesn't help with the problem of accepting possibly tainted tokens, and the resulting loss of the stablecoin stability.

Sorry I meant the Treasury. These would be seized digital coins.