It is no secret that the US government is one of the largest Bitcoin holders in the world, with its stash valued at over $6.7 billion.
However, it seems the US Government has seized and sold over 195,000 BTC since 2014. Just how much better off they would have fared had they decided to HODL?
The United States has primarily dealt with monitoring and seizing cryptocurrencies—which were created to elude law enforcement—by utilizing antiquated crime-fighting techniques.
The transit of Bitcoin and other cryptos through the American criminal court system currently has three major intersections.
The search and seizure phase is the first. The second is the clearing of crypto that has been raided. The third is using the money that was raised from the cryptocurrency sales.
To guarantee adequate supervision, several agents are involved during the actual seizure. This includes managers who set up the hardware wallets required to safeguard the cryptocurrency that has been confiscated.
Government crypto coffers are predicted to rise even higher as cybercrime increases and the haul of digital tokens rises with it.
The U.S. Marshals Service is the primary organization in charge of auctioning off the government’s cryptocurrency assets after a case is closed. More than 195,000 Bitcoins have been confiscated and put up for sale thus far.
While many of the coins were sold in batches far below today’s market, the hoard of coins is currently valued at over $6.7 billion. However, just a year ago, its value was around $8.6 billion and there were 10,000 Bitcoin less confiscated.
The Internal Revenue Service (IRS) carried out the most significant Silk Road seizure in 2020. Following the government’s successful tracking of assets taken from the site before it was shut down, the IRS took possession of 69,369 BTC from an anonymous hacker on the Silk Road.
The majority of the government’s Bitcoin stockpile is stored offline in hardware wallets, which are encrypted storage devices managed by the Internal Revenue Service and the Justice Department .
But occasionally, the US government also uses an auction system to sell some of the Bitcoin that has been confiscated in accordance with court liquidation orders.
The feds divide the loot after a case is closed and the cryptocurrency has been converted to fiat money. One of two accounts—the Department of Justice Assets Forfeiture Fund or the Treasury Forfeiture Fund —usually receives the sale’s revenues.
Once deposited into one of these two funds, the liquidated cryptocurrency can be used for multiple line items. Congress has the authority to withhold the funds and allocate them to alternative initiatives.
The government sold 9,861.2 BTC on March 14 for around $21,800 for each token. On this date, Bitcoin was trading at a high of about $26,500 and a low of about $24,000 on the majority of exchanges.
According to court records, transaction fees for the sale cost government representatives more than $215,000. The remaining 41,500 BTC ($1.2 billion) will be sold this year in four phases, according to the officials. It was not specified how the sale was made.
The US has previously auctioned off crypto that was seized. Venture entrepreneur Tim Draper received over 30,000 BTC in 2014 from officials, which were also seized in connection with Silk Road.
At the time of the auction, the BTC was estimated to be worth about $17 million, but it is currently worth more than $850 million. More than $5 billion, according to a dashboard monitoring US government bitcoin auctions, has been lost by early Bitcoin sales.
It appears that the US Government did not believe that Bitcoin could have reached the levels it has done. Back in 2014, when the crypto market was still in its infancy, that was a not-unreasonable assumption. However, had the government been a little less gung-ho about selling BTC, they could have turned a profit which would have helped American citizens to the tune of almost $6.8 billion .