U.S. Government: A Bitcoin Whales with 200k BTC, Yet Value Isn’t the Main Concern
How Did the U.S. Acquire 200,000 Bitcoins?
According to the Wall Street Journal, the U.S. government ranks amongst the largest Bitcoin holders globally. Surprisingly, unlike most investors, it remains indifferent to its cryptocurrency’s value fluctuations. This massive accumulation, totaling approximately 200,000 BTC, primarily stems from seizures linked to cybercrimes and dark web markets. Since the 2013 Silk Road shutdown, 69,000 BTC once owned by the platform’s creator and an additional 50,676 BTC from a Georgian man have been confiscated.
Securing the Digital Wealth
These Bitcoins are meticulously stored in specialized hardware wallets, overseen by departments like the Justice and the Internal Revenue Service. Traders frequently monitor this enormous Bitcoin stash in the crypto market, recognizing that any sales could drastically affect market prices.
Recent Seizure Data
Data from crypto firm 21.co reveals three significant Bitcoin confiscations by the government, tallying over 200,000 BTC. Even after liquidating roughly 20,000 BTC, the remaining value still exceeds $5 billion.
Why the Liquidation Process is Slow
The government’s disposal pace is sluggish, primarily due to legal constraints. For instance, while Bitcoin was valued at $600 during the 2016 Bitfinex exchange hack, by the time the main perpetrator was apprehended in 2022, the seized 95,000 BTC’s value had rocketed to $44,000.
An IRS official clarified, “We don’t play the market; we essentially operate on our procedural timeline.”
A Carnegie Mellon professor added that bureaucratic red tape and the necessity for due diligence often prolong government asset handling.
Shift in Liquidation Methods: From Auctions to Exchanges
Previously, U.S. courts sold Bitcoins via auctions. Prominent Bitcoin proponent Tim Draper, for example, acquired over 30,000 BTC from the government through two 2014 auctions. However, by January 2021, U.S. courts had pivoted to liquidating digital currencies on cryptocurrency exchanges. Historically, the government often staggered its crypto sales to mitigate substantial order impacts on the market. Currently, they take extra precautions, such as elongated, phased crypto liquidations. One such sale occurred in March, where the government sold 9,861 BTC through Coinbase.
Reiterating their stance, U.S. courts emphasized that their objective remains “disposing of assets at a fair market value promptly.”
Concluding, an IRS official remarked, “Adapting quickly is challenging for us. The crypto industry has undergone changes in less than a decade that might take the financial sector a century.”
Keywords: U.S. Government, Bitcoin, Wall Street Journal, Silk Road, crypto market, 21.co, Bitfinex, IRS, Carnegie Mellon, Tim Draper, Coinbase, liquidation, cryptocurrency exchanges
