Despite the US government’s supposed aversion to Bitcoin and other cryptocurrencies, a recent report shows that the country happens to be one of the largest holders of the pioneer cryptocurrency.
How The US Government Holds $5 Billion In Bitcoin
According to a report by the Wall Street Journal (WSJ), most of the US government’s Bitcoin holdings (200,000 BTC) have come as a result of seizures from cybercriminals and darknet markets. The majority of these tokens are said to be primarily held in cold wallets controlled by the Justice Department, the Internal Revenue Service (IRS), or another government agency.
One such other agency would likely be the Federal Bureau of Investigation (FBI), as Bitcoinist had earlier reported the FBI had confiscated close to $1.7 million worth of crypto between March and July this year. Of this total, $147,000 was from Bitcoin seizures alone.
The WSJ report further provided insights into how the government dealt with these BTC, something which has always been of interest to the crypto community, considering that any potential sell-off could significantly affect the market. The government is usually forced to HODL (although it isn’t for the same reason as other crypto enthusiasts) because the seizures represent a “byproduct of a lengthy legal process.”
The major reason why the government is forced to hold its stash of Bitcoin is because it doesn’t immediately own these assets whenever a seizure occurs. Instead, it has to wait for a court to issue a final forfeiture order before ownership is transferred. When that happens, the government then transfers the tokens to the US Marshals Service, which is responsible for liquidating these assets.
The Marshals Service is, however, considerate of everyone in the crypto market as they usually liquidate these tokens in batches rather than all at once. The most recent sale happened in March (as confirmed by the Marshals Service) when it sold 9,861 BTC via Coinbase.
The Government’s Major Seizures
There is evidence that suggests that the government’s Bitcoin holdings may be more than 200,000 BTC at one point. According to a report on Dune Analytics, the US government has seized at least 215,000 BTC since 2020. Interestingly, only the government’s three major Bitcoin seizures combined already surpass the 200,000 mark.
In November 2020, it seized 69,369 BTC as some of the proceeds from the Silk Road marketplace. In January 2022, it seized 94,643 BTC as part of the proceeds from the Bitfinex hack. Meanwhile, it seized 50,676 BTC from James Zhong, a Georgia man who is said to have stolen funds from the Silk Road marketplace.
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