It is important to note that when a government agency seizes a crypto asset, it does not immediately own the assets. Ownership transfers only after a court ruling in favor of forfeiture.
The United States government is among the largest Bitcoin (BTC) holders in the industry, with over 200,000 of the crypto assets stashed away in a hardware wallet controlled by the Department of Justice (DOJ), International Revenue Services (IRS), and other agencies in the country.
According to a public data analysis published by 21. co, the parent company of 21 Shares, the crypto assets obtained as a result of confiscation from illegal activities on the internet amount to approximately $5.3 billion. The company emphasized that these estimates represent the minimum amount as the government has previously offloaded some of its BTC stash in the past.
US Government Confiscates Bitcoin from Silk Road
The massive BTC holdings came from three recent seizures between 2020 to 2022. According to the available data, the government confiscated 69,369 BTC worth around $3.36 billion from the Silk Road after the crackdown on the darknet marketplace in November 2020.
Two years later, in January 2022, the US federal government seized 94,643 bitcoins associated with the Bitfinex hack, and in March 2022, 51,326 BTC were confiscated in the James Zhong case, totaling 215,338 BTCs.
In addition to the recent seizures, the Wall Street Journal revealed that part of the government’s crypto reserve includes ones obtained from various operations targeting individuals and organizations involved in cybercrimes.
It is important to note that when a government agency seizes a crypto asset, it does not immediately own the assets. Ownership transfers only after a court ruling in favor of forfeiture. Afterward, the assets are moved offline to a hardware wallet controlled by the US Marshals Service. The agency is responsible for managing and disposing of seized assets, including cryptocurrencies, through auctions or other means in accordance with the country’s law.
US Government Sells Its Bitcoin Stash
Since the last seizure, the US Marshals Service has been gradually selling off the seized assets in batches. The agency previously organized auctions to sell cryptocurrencies directly to interested buyers, including notable figures like venture capitalist Tim Draper.
So far, the billionaire venture capitalist has acquired more than 30,000 bitcoins from the government. In 2014, Draper participated in two separate auctions conducted by the US Marshals, where he bought BTC at the rate of $632 and $191 per token, respectively.
The Marshals have recently shifted their strategy, opting for liquidation through established crypto exchanges rather than traditional auctions. For instance, earlier this year, the government sold 9,118 BTC on Coinbase in smaller batches in March.
According to Jarod Koopman, executive director of the IRS’s cyber and forensics services section, which oversees all activities focused on cybercrime, crypto assets are dispatched in batches to avoid disrupting the market. He said:
“We don’t play the market. We basically are set by the timing of our process.”
Meanwhile, the funds generated from the sale of these assets are often allocated towards compensating victims and covering various expenses related to the investigation and prevention of complex cybercrimes.
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Chimamanda is a crypto enthusiast and experienced writer focusing on the dynamic world of cryptocurrencies. She joined the industry in 2019 and has since developed an interest in the emerging economy. She combines her passion for blockchain technology with her love for travel and food, bringing a fresh and engaging perspective to her work.
Source: https://www.coinspeaker.com/us-government-5-3b-bitcoin/