Donald Trump intends to make the United States the crypto capital of the planet. The former president promised this and more during a rousing speech given at the Bitcoin 2024 conference in Nashville, Tennessee, on July 27. But some of the Republican candidate’s comments may have been cause for consternation among cryptocurrency advocates.
While Trump’s speech largely centered on Bitcoin and the community surrounding it being a positive force for America, he did lay out some specifics. Chief among his promises was that the US wouldn’t part with its current Bitcoin stockpile, if he's re-elected.
Per Trump:
“For too long, our government has violated a cardinal rule that every Bitcoiner knows by heart: never sell your bitcoin. If I am elected, it will be the policy of my administration for the United States of America to keep 100% of all the bitcoin the US. government currently holds or acquires.”
According to Casa co-founder and CTO Jamison Lopp, however, “there is a slight problem no one is acknowledging regarding the plan.”
Bitfinex assets
The US government purportedly holds 212,847 bitcoin, as of April, 2024. The total value, as of July 28, stands at approximately $14.4 billion.
Part of those funds originate from the Bitfinex cryptocurrency exchange. In 2022 the US government seized “approximately 94,636” BTC from wallets associated with hackers who admitted responsibility for stealing 119,754 BTC from the exchange in 2016.
If we remove those coins from the government’s holdings, the US would be left with about $8 billion worth of BTC in its coffers.
US asset forfeiture laws
The investigation into the Bitfinex hack appears to be ongoing. There’s little in the way of news since the 2022 seizure. The US has transferred assets related to the hack between wallets as recently as February, 2024, but it’s unclear at this time exactly what the Justice Department intends to do with the funds.
There isn’t much in the way of legal precedence either, which raises myriad questions with answers that may not be forthcoming.
Firstly, federal laws surrounding asset forfeiture typically don’t prioritize making victims whole again, especially when investigations may be ongoing.
If, for example, the funds were connected to other assets purportedly linked to other alleged crimes, then the Justice Department would be errant in its prosecutorial duties if it returned a portion of the related funds prior to issuing any pursuant actions against other suspects.
There are also situations where it could be illegal for US agents to return funds stolen in aggregate to a single-source distributor. A judge could, conceivably, order the US to return the stolen funds to affected users under the oversight of a neutral third party custodian.
All of this is purely speculatory while the investigation and/or any follow-on legal action remains ongoing. But there’s more at play than just the legalities.
Secondly, by Trump’s own admission he intends to hold all the government’s Bitcoin. But it’s possible the president merely meant he wouldn’t sell Bitcoin for the purposes of cashing out the assets for fiat currency to make a quick profit.
Generally speaking, there’s no reason to assume Trump intends to defy any court rulings ordering the government to return the funds.
Finally, Trump specifically said it would be his administration’s “policy” to hold all the BTC the US currently has. While this does imply that he’s including the Bitfinex assets, it also implies that the administration will remain flexible.
There’s a difference between legislation or an executive order prohibiting the sale of cryptocurrency in the government’s possession and a policy against such sales.
Ulbricht fund recovery unlikely
On the subject of Silk Road founder Ross Ulbricht, however, things are a bit simpler. Ulbricht was convicted in 2015 on charges related to narcotics trafficking, hacking, and money laundering. He was subsequently sentenced to and is currently serving “double life” plus 40 years in prison.
In 2020, the US government seized 50,591 BTC purportedly stolen from Ross and Silk Road in a previous hack. As of July 28, those assets would make up approximately $3.4 billion of the US government’s current holdings.
During his Bitcoin 2024 speech, Trump promised, if re-elected, to commute Ulbricht’s sentence.
Related: Trump to end war on crypto if elected, says US will be ‘crypto capital of the planet’’
With a commutation, Ulbricht’s conviction would still stand. He’d essentially be released with time served and the funds, which have been labelled as criminal proceeds, would remit to the US government.
That’s entirely different from a pardon, something presidential candidate Robert F. Kennedy Jr. recently said he would give Ulbricht on day one, were he elected.
A pardon would legally absolve Ulbricht of his crimes and, technically, provide a legal path towards recovery.
However, Ulbricht reportedly signed away his claim to those funds in 2022 as part of a deal with the courts to repay his $183 million restitution debt. This likely leaves him with no legal claim to the seized bitcoin going forward.
