U.S. Government Holds 198,800 BTC, Mostly from Criminal Seizures

The current estimated valuation of the vaults of Bitcoin held by the U.S. government is about $ 17.7 billion.

This results from the current market value of around $ 17.7 billion. Stolen or confiscated Bitcoin from criminal enterprises largely constitutes these government-held Bitcoin. Seizures of Bitcoin during unlawful operations have been just one of the reasons for the rapid growth of the Bitcoin stockpile. Hacking operations have been just one of the areas targeted by authorities trying to control the growth of criminal enterprises using Bitcoin.

Bitcoin, frequently lauded for its anonymity and decentralized character, has entered the criminal ecosystem as a vehicle for obtaining illicit goods and services. Yet, in a bid to combat that very criminal milieu, the U.S. government has begun to seize, over the past several years, large quantities of our nation’s (and we the people’s) Bitcoins. Indeed, even as the appearance of the U.S. government in Bitcoin-related court cases has often been to argue for the Bitcoin’s seizure on commingling-with-cash-in-a-sock rationale, large-scale Bitcoin seizures have systematically filled government coffers.

The largest part of the Bitcoin that the U.S. government possesses comes from seizures associated with substantial hacking operations. Some of the most prominent seizures included:

– November 2020: The U.S. government took possession of 69,370 BTC from the hacker of Silk Road, only known as “Individual X.” Silk Road was a dark web marketplace that allowed individuals to purchase drugs, firearms, and other illicit services. The seizure of these bitcoins, which was the result of a lengthy investigation, represented a significant step toward cutting off illegal activity associated with the dark web.

– January 2022: The government executed another notable declaration when it announced that it had confiscated 94,636 BTC from the Bitfinex hacking incident. Hackers Ilya Lichtenstein and Heather Morgan stole these funds from the Bitfinex exchange in 2016. The recovered stolen Bitcoin came courtesy of a meticulous investigation by the Department of Justice. That investigation concluded with the arrest of the couple in early 2022.

– March 2022: A third significant Bitcoin confiscation occurred in March when the U.S. government took control of 51,351 BTC linked to another hacker from Silk Road, James Zhong. Zhong was taken into custody after he was discovered to have within his grasp a staggering fortune in Bitcoin that had been obtained through a variety of illegal Silk Road-related activities. This seizure, it is estimated, added another considerable boost to the stunning growth of the government’s Bitcoin cache.

The U.S. government’s sustained fight against cybercrime is reflected in these large seizures. They involve a currency that hackers and online criminals often prefer: Bitcoin. Yet the process underlying these seizures is as notable as their size. It demonstrates that, with the right tools—and a lot of investment in those tools—the government can track stolen cryptocurrency and recover it.

While the current U.S. government has a good bit of Bitcoin, what to do with it is still up in the air. In January of this year, the Department of Justice got the nod to sell off the Bitcoin from the Silk Road operations they had seized. But the department didn’t do anything right away and, as it turns out, was not planning to do anything at all before Biden was sworn in as president.

Selling off the confiscated Bitcoin has stirred the pot and raised questions about the possible effect on the cryptocurrency market. The U.S. government, in deciding to part with so much Bitcoin, could cause the very fluctuations one would expect from a government that’s apparently an upholder of law and order, but not of markets. If this is a going concern, then why haven’t they started selling yet in order to, y’know, not cause market disruptions?

Moreover, no official statement has been made regarding the government’s intentions with the Bitcoin. It could hold onto the Bitcoin, but if it doesn’t, it might end up needing to sell the Bitcoin. Selling such a large quantity could flood the market, potentially driving prices down, but it could also be an opportunity for the government to capitalize on Bitcoin’s value. The proceeds from the sale, if executed, could fund future government operations or be reinvested in initiatives aimed at tackling cybercrime.

The ascension of Bitcoin and other cryptocurrencies has presented fresh hurdles for police entities globally. Although cryptocurrencies are private and user-friendly, they are also a means for crestfallen characters to mask unwholesome exchanges. The blockchain dutifully records all Bitcoin transactions and holds them up for public display, but these records have a way of looking very much like the private records kept by banks if one is to think mainly of the inside and outside of a bank’s vault. They are also, as noted, quite pseudonymous and hence cryptic. Indeed, with respect to the appearance of untraceable transactions, sometimes the true essence of a transaction is more likely to be hidden in plain sight than to be found behind the cracked doors of, say, a bank. And as for what goes on behind any closed doors, well, that’s why we have police.

As a response, the governments and law enforcement agencies have changed their ways to keep up with this new form of crime. Agencies like the U.S. Department of Justice are now very good at tracing the transactions of these new money forms and work with outfit (usually in private industry) that specializes in “blockchain analytics” to follow stolen or otherwise illegally obtained Bitcoins. (Successful tracing has led to the big seizures of Bitcoins that seem to happen every couple of months.)

The U.S. government demonstrates the cryptocurrency community and criminals a clear message when it seizes virtual currency. It isn’t offering any real degrees of separation, if that’s what you thought, as these are high-profile, high-value currencies. And if this isn’t a commitment to some sort of crackdown in

The current quantity of Bitcoin held by the U.S. government totals roughly 198,800 BTC. That puts a significant part of the foreseeable global Bitcoin supply into the hands of federal authorities—and a growing portion, it would seem, of the cryptocurrency ecosystem. The Bitcoin that the government holds comes mostly from criminal cases, with federal investigators seizing major amounts (roughly 100,000 BTC, at last count) since 2014. Some of that crypto was recovered from notorious hacks and bad cyberbusinesses; much more was taken from people running dark web marketplaces like the Silk Road. Now the government is trying to figure out what to do with all the seized Bitcoin.

Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any services.

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