Just ten days after the U.S. government recommitted $6 billion worth of military security aid to Ukraine, the U.S. Department of Justice is preparing to initiate the liquidation of a massive Bitcoin asset.
The Ministry of Justice has received approval to dispose of 69,370 Bitcoins seized in connection with the famous Silk Road case, an official confirmed to DB News on January 9. The current market value of this asset is about $6.5 billion.
The Justice Department is understood to have requested permission to sell the assets, citing bitcoin price volatility. When asked about the next move, a Justice Department spokesperson said: "The government will proceed with the next move based on the verdict in this case."
After the news broke, Bitcoin fell more than 2.5% in 24 hours, and at the time of writing, the price was $94,400.
One of the most influential milestones in Bitcoin history: Silk Road
In October 2013, a young man named Ross Ulbricht was arrested in a San Francisco library. He used the alias "Dread Pirate Roberts" (DPR), and the once-popular drug and weapons trading website "Silk Road" was declared dead. In 2015, Ross Ulbricht was sentenced to life imprisonment.
This dark web, which was born in 2011, initially provided a trading platform for various illegal goods and services in a "similar model to eBay", such as drugs, fake documents, hacker tools, etc. Due to the anonymity of the dark web and Bitcoin as the main payment tool, Silk Road once developed rapidly and was regarded as one of the most famous and largest illegal markets in the dark web.
From 2012 to 2013, the FBI, DEA and other law enforcement agencies began to pay close attention to Silk Road and secretly deployed undercover personnel. Due to the frequent and large-scale transactions on the platform and its involvement in illegal activities in multiple countries, the US law enforcement agencies listed it as a key target for crackdown.
When the FBI cracked the Silk Road case, it seized a total of about 170,000 bitcoins from the platform's servers and Ross Ulbricht's personal digital wallet, which was one of the largest Bitcoin law enforcement seizures in history at the time.
When law enforcement officers arrested Ross Ulbricht, they obtained access to the relevant encrypted wallets through the laptops and server information seized at the scene. Since Bitcoin transactions require private keys to transfer, once law enforcement agencies obtain valid private keys, they can transfer the corresponding Bitcoins from the suspect's address to the official "custodial" wallet.
This isn’t the first time the U.S. government has sold Bitcoin
Since 2014, the U.S. government has auctioned bitcoins seized from the Silk Road case several times. The timing and impact on market prices are worth reviewing.
In June 2014, the US government held its first public auction of Bitcoins seized from Silk Road. The US Marshals Service auctioned about 30,000 Bitcoins. Bidders included many investment institutions and individuals, and well-known investor Tim Draper won the bid several times. In subsequent auctions, the government sold the remaining Bitcoins in batches.
After the auction, the price of Bitcoin did not "collapse" around $600, but remained stable. As the auction process showed that institutional investors were actively bidding, the "legalization" attribute of Bitcoin was also strengthened to a certain extent.
In December 2014, the second round of auctions of 50,000 bitcoins was held, nearly twice the size of the first auction, and market expectations were also pessimistic. However, after the auction, bitcoin continued to fluctuate between $300 and $400, without experiencing a continuous plunge.
In March 2015, 50,000 bitcoins were auctioned again, and bitcoin had recovered from its previous low. The panic in the market further subsided, and the price quickly stabilized after a small fluctuation between $280 and $300.
In November 2015, the US government's cumulative auction of hundreds of thousands of bitcoins at the end of the year did not ultimately cause major market turmoil. Instead, as buyers continued to compete for bids, these auctions were interpreted as a symbol of Bitcoin gradually gaining more "legitimate investment" status.
Until today, the U.S. Department of Justice was approved to liquidate the remaining 69,370 BTC (worth approximately US$6.5 billion) seized in the Silk Road case. The wallet address "bc1qa5" marked as Silk Road has been silent for more than 4 years.
Based on past sales history, the price of Bitcoin may experience a short-term price panic, but in the long run, since the US government has mostly adopted OTC auctions in the past, it may not sell at market prices, and the negative impact on the price of Bitcoin will not last too long.
Trump's pardon and Bitcoin reserve pledge may put sales on hold?
In May 2024, during his presidential campaign, Trump promised at the Libertarian Party National Convention in Washington, D.C. that if he was re-elected as president, he would commute the sentence of Silk Road founder Ross Ulbricht on the first day. On July 28, Trump spoke at the Bitcoin 2024 conference and said that he once again promised to commute the sentence of Silk Road founder Ross Ulbricht if he was elected president.
On November 14, Ross William Ulbricht posted on the X platform for the first time after the US election, saying, "I would like to express my sincere gratitude to everyone who voted for President Trump. I believe he will fulfill his promise and give me a second chance. After more than 11 years in the dark, I finally see the light of freedom at the end of the tunnel. Thank you very much."
As of now, the bet on "Will the US government sell Bitcoin before Trump's inauguration?" on PolyMarket has become a popular bet, with a betting volume of $136,310 and a probability of selling Bitcoin before Trump's inauguration of 22%.
Given that Trump had previously promised to commute the sentence of Ross, the founder of the Silk Road, and had repeatedly reiterated that he would make the United States the world's cryptocurrency capital and embrace cryptocurrency.
Therefore, most people believe that Ross may have his sentence commuted or even pardoned. It can also be seen on PolyMarket's betting topic about "Who will Trump pardon within the first 100 days of taking office?" that the possibility of Ross being pardoned is very high, and the probability of being pardoned is 73% so far.
Due to Trump's commitment to Bitcoin reserves, the market speculates that the Bitcoins seized from the Silk Road case will not be sold if the US government does not sell them before Trump's official inauguration on January 20.
How many Bitcoins does the US government have?
According to data from Bitcoin Treasuries, the U.S. government holds 207,189 bitcoins, accounting for 0.987%. Based on the current bitcoin price, the total value of bitcoins held by the U.S. government is $19,544,018,200.
