Coinbase Helps U.S. Marshals Sell Seized Bitcoin

• USMS accelerates Silk Road Bitcoin liquidation, aiming to sell assets within 5 business days of forfeiture.
• New USMS protocols reduce delays in Bitcoin liquidation, ensuring faster fund deposit into the Forfeiture Fund.
• Segregated assets and rapid sales mark a shift in USMS handling of Silk Road Bitcoin under Coinbase agreement.

The US Marshals Service (USMS) is accelerating the sale of Bitcoin seized from the Silk Road. This move follows the service’s updated approach to handling cryptocurrency assets under its custody. Historically, the USMS has faced challenges in disposing of large quantities of Bitcoin, primarily due to the need to justify auction sizes and the bureaucratic processes involved. 

To address these issues, the USMS has adopted new procedures, especially when using its exchange account. These changes allow for quicker sales without the usual auction delays. The service aims to sell cryptocurrency within five business days of forfeiture, as stated in its cryptocurrency services contract.

This fast-paced selling is also driven by financial reporting rules that limit withdrawals from exchange accounts near the end of each month. Additionally, USMS officials cannot keep cryptocurrency or sale proceeds in exchange accounts for long periods. Because of this, the USMS must plan its sales to follow these rules and reduce its exposure to market changes.

The agreement with Coinbase, which started in June, requires USMS assets to stay separate. Transfers to custodial addresses indicate upcoming sales, as per the contract. This approach should shorten the time between asset forfeiture and depositing funds into the Assets Forfeiture Fund, addressing long-standing concerns about delays and market swings.

The new strategy will be clear in the upcoming DOJ Asset Forfeiture Program report for FY2024. This report will likely confirm the ongoing sales and provide more details about how well the new procedures are working. The Biden-Harris administration is unlikely to stop this process, despite potential political factors, as the framework seems to be firmly established.
The USMS is poised to complete the sale of the remaining Silk Road Bitcoin through a streamlined and expedited process, minimizing risks and ensuring compliance with financial regulations.