Author: Helene Braun, CoinDesk; Translated by: Tao Zhu, Golden Finance
It wasn’t Germany that was selling millions of dollars worth of Bitcoin, but rather a small German state, Saxony.
The state seized nearly 50,000 bitcoins in January and has been selling its holdings as part of standard practice for assets seized during criminal investigations, one expert said.
For days, news outlets around the world have reported on the sale of hundreds of millions of dollars worth of Bitcoin (BTC) in Germany and the ensuing market distress and sharp drop in cryptocurrency prices.
First of all, it’s not Germany itself that’s selling cryptocurrencies. It’s a small state in eastern Germany called Saxony.
Second, while cryptocurrency enthusiasts may scoff at the decision to sell off so many of their beloved bitcoins, Saxony has little choice.
Earlier this year, the state criminal police agency (known by its German acronym LKA) seized 49,857 bitcoins (worth nearly $3 billion at current prices) from the operators of Movie2k.to, which Saxony convicted of money laundering and other illegal activities.
About a week ago, a crypto wallet owned by the German Federal Criminal Police (BKA) began transferring thousands of BTC to exchanges such as Kraken, Coinbase and Bitstamp, indicating an intention to sell them. The wallet's Bitcoin holdings have since shrunk to 23,788.
The reaction on social media was fierce.
“Germany selling all of its#Bitcoinwould be one of the dumbest things its politicians have ever done,” one X user wrote.
Another user said: "German government officials are just idiots."
But what’s happening in Germany isn’t a bad investment strategy — one expert says it’s just standard procedure for seizing assets in criminal investigations.
“The Saxon State Prosecutor’s Office is responsible for liquidating seized assets, so the sell-off is not surprising,” said Dr. Lennart Ante, co-founder and CEO of the German Blockchain Research Lab. “Seized assets are always liquidated within a certain period. This is a regular business process, albeit on a larger scale than normal.”
He speculated that the wallet belonged to the country’s BKA — and not the state of Saxony itself — probably because the police agency was involved in the initial investigation and had the technical knowledge to handle such a large amount of Bitcoin. However, the BKA has no decision-making power and acts only on instructions from the state.
In most cases, seized assets can only be transferred or sold if a judge rules that the state is allowed to do so, with the proceeds going into the state budget, but that was not the case in this case. However, Ante explained that states can request the initiation of an emergency sale, for example if the assets are likely to depreciate rapidly in value or are difficult to store.
“In the case of Bitcoin, this can at least be debated on the grounds of volatility,” he said.
However, there is evidence that Saxony tried to sell too much Bitcoin at once. On Tuesday, it withdrew $200 million from some exchanges, suggesting there was not enough demand to buy such a huge amount.
