Author: shushu, BlockBeats
Just ten days after the US government promised to provide $6 billion in military aid to Ukraine, the DOJ was preparing to initiate the liquidation of a large amount of Bitcoin assets.
On January 9, an official confirmed to DB News that the DOJ had been authorized to dispose of 69,370 Bitcoins seized in connection with the infamous Silk Road case. The current market value of this asset is approximately $6.5 billion.
It is reported that the Department of Justice requested permission to sell these assets due to the volatility of Bitcoin prices. When asked about the next steps, a DOJ spokesperson stated: 'The government will act according to the verdict of this case.'
After the news broke, Bitcoin fell more than 2.5% in 24 hours, and as of the time of writing, the price is $94,400.
One of the most influential milestones in Bitcoin's history: Silk Road
In October 2013, a young man named Ross Ulbricht was arrested in a library in San Francisco, using the alias 'Dread Pirate Roberts' (DPR). Thus, the once notorious drug and weapon trading website 'Silk Road' declared its demise. In 2015, Ross Ulbricht was sentenced to life in prison.
This dark web platform, which emerged in 2011, initially provided a trading platform for various illegal goods and services in a 'similar to eBay' model, such as drugs, fake documents, and hacking tools. Due to the anonymity of the dark web and Bitcoin being the primary payment tool, Silk Road rapidly developed and was regarded as one of the most famous and largest illegal markets on the dark web.
From 2012 to 2013, US law enforcement agencies, including the FBI and DEA, began closely monitoring Silk Road and secretly deployed undercover agents. Due to the platform's frequent transactions, large scale, and involvement in illegal activities across multiple countries, US law enforcement agencies listed it as a key target for crackdown.
When the FBI cracked down on the Silk Road case, it seized approximately 170,000 Bitcoins from the platform's servers and Ross Ulbricht's personal digital wallet, which was one of the largest law enforcement seizures of Bitcoin in history at the time.
When law enforcement arrested Ross Ulbricht, they gained access to relevant encrypted wallets through the laptops and server information seized on-site. Since Bitcoin transactions require a private key to facilitate transfers, once law enforcement obtains a valid private key, they can move the corresponding Bitcoins from the suspect's address to an official 'custody' wallet.
This is not the first time the US government has sold Bitcoins.
Since 2014, the US government has auctioned off Bitcoins seized from the 'Silk Road' case multiple times, and the timing and impact on market prices are worth reviewing.
In June 2014, the US government publicly auctioned the Bitcoins seized from Silk Road for the first time. The US Marshals Service auctioned approximately 30,000 Bitcoins. Bidders included many investment institutions and individuals, with notable investor Tim Draper winning multiple bids. In subsequent auctions, the government sold the remaining Bitcoins in batches.
After the auction, Bitcoin prices remained stable around $600 and did not experience a 'crash.' The auction process showed active bidding from institutional investors, which, to some extent, strengthened Bitcoin's 'legitimization' attributes.
In December 2014, a second auction of 50,000 Bitcoins, nearly double the size of the first auction, was held, and market expectations were similarly pessimistic. However, after the auction concluded, Bitcoin remained stable in the $300 to $400 range and did not experience a continuous drop.
In March 2015, another auction of 50,000 Bitcoins was held, during which Bitcoin had already recovered from its previous lows. The previous market panic had further weakened, and after slight fluctuations between $280 and $300, the price quickly stabilized.
In November 2015, the US government auctioned off hundreds of thousands of Bitcoins, ultimately not causing significant market turmoil. On the contrary, due to the ongoing bidding from buyers, these auctions were interpreted as a symbol of Bitcoin gradually gaining more 'legitimate investment' status.
To this day, the US Department of Justice has been authorized to liquidate the remaining 69,370 BTC (worth approximately $6.5 billion) seized in the Silk Road case, which has been dormant for over four years at the designated Silk Road wallet address 'bc1qa5.'
Based on historical sales data, Bitcoin prices may experience a brief panic, but in the long term, due to the past actions of the US government, which often resorted to OTC auctions, it is unlikely to be sold at market price, and the negative impact on Bitcoin prices will not last long.
Will Trump's pardon and Bitcoin reserve promise delay the sale?
In May 2024, during his presidential campaign, Trump promised at the Libertarian National Convention in Washington, D.C. that if he is re-elected, he will reduce the sentence of 'Silk Road' founder Ross Ulbricht on the first day. On July 28, during his speech at the Bitcoin 2024 conference, Trump reiterated his promise to reduce Ross Ulbricht's sentence if elected president.
On November 14, Ross William Ulbricht posted on the X platform for the first time since the US election, stating, 'I sincerely thank everyone who voted for President Trump. I believe he will fulfill his promise and give me a second chance. After spending more than 11 years in darkness, I finally see the light of freedom at the end of the tunnel. Thank you very much.'
As of now, the bets on PolyMarket regarding 'Will the US government sell Bitcoins before Trump takes office?' have become popular, with a betting volume of $136,310, and the probability of selling Bitcoins before Trump takes office is 22%.
Given that Trump previously promised to reduce the sentence of 'Silk Road' founder Ross and has repeatedly stated that he will make the US the world's cryptocurrency capital and embrace cryptocurrencies.
Therefore, most people believe that Ross may receive a sentence reduction or even a pardon. Similarly, there is a high probability that Ross will be pardoned in the topic of bets on PolyMarket regarding 'Who will be pardoned within 100 days of Trump's presidency?', with a current probability of 73%.
Due to Trump's promise regarding Bitcoin reserves, if the US government does not sell before January 20 when Trump officially takes office, market speculation suggests that the Bitcoins from the Silk Road case may not be sold.
How many Bitcoins does the US government still have?
According to Bitcion Treasuries data, the number of Bitcoins held by the US government is 207,189, accounting for 0.987%. Based on the current Bitcoin price, the total value of the Bitcoins held by the US government is $19,544,018,200.
