Author: Tristan Greene, CoinTelegraph; Translated by: Deng Tong, Golden Finance
Donald Trump intends to make the United States the cryptocurrency capital of the planet. The former president promised that and more during a rousing speech at the Bitcoin 2024 conference in Nashville, Tennessee, on July 27. But some of the Republican candidate’s comments may have caused consternation among cryptocurrency advocates.
While Trump’s speech was largely focused on how Bitcoin and the community around it are a positive force for the United States, he did lay out a few specifics. His main promise was that the United States would not give up its current Bitcoin reserves if he was re-elected.
According to Trump:
“For too long, our government has violated the cardinal rule that every Bitcoin user knows by heart: Never sell your Bitcoin. If elected, my administration will adopt policies that would allow the United States to retain 100% of all Bitcoin currently held or acquired by the U.S. government.”
However, Jameson Lopp, co-founder and chief technology officer of Casa, said, “There was a small problem with the program that no one was acknowledging.”
Source: Jameson Lopp.
Bitfinex Assets
As of April 2024, the U.S. government reportedly holds 212,847 Bitcoins. As of July 28, the total value is approximately $14.4 billion.
Part of these funds came from the Bitfinex cryptocurrency exchange. In 2022, the US government seized “approximately 94,636” BTC from wallets associated with hackers who admitted to stealing 119,754 BTC from the exchange in 2016.
If we removed these cryptocurrencies from government holdings, the U.S. would be left with about $8 billion worth of BTC in its vaults.
U.S. Asset Forfeiture Laws
The investigation into the Bitfinex hack appears to be ongoing. There has been little news since the seizure in 2022. The U.S. recently moved assets related to the hack between wallets in February 2024, but it is unclear what the Department of Justice plans to do with the funds.
There also isn’t much legal precedent, which raises a myriad of questions that may go unanswered.
First, federal laws regarding asset forfeiture generally do not prioritize making victims whole again, especially when an investigation may be ongoing.
For example, if the funds are tied to other assets allegedly linked to other suspected crimes, the DOJ would be erring in its prosecutorial duties if it returned some of the funds in question before taking any subsequent action against the other suspects.
In some cases, it may also be illegal for U.S. agents to return stolen funds in aggregate to a single-source distributor. Conceivably, a judge could order the U.S. to return stolen funds to affected users under the supervision of a third-party neutral custodian.
All of this is pure speculation while the investigation and any subsequent legal action is still ongoing. But there are more factors at play than just legality.
Second, Trump himself admitted that he intends to hold all of the government’s Bitcoin. But the president may just be saying that he will not sell Bitcoin in order to convert the assets into fiat currency for a quick profit.
Generally speaking, there is no reason to think Trump intends to ignore any court ruling requiring the government to return the funds.
Finally, Trump made it clear that his administration’s “policy” is to hold all Bitcoin currently owned by the U.S. While this does mean he will include Bitfinex assets, it also means the administration will remain flexible.
There is a difference between legislation or executive orders prohibiting the sale of government-held cryptocurrency and policies targeting such sales.
Ulbricht funds unlikely to be recovered
However, things are a little simpler when it comes to Silk Road founder Ross Ulbricht, who was convicted in 2015 on charges related to drug trafficking, hacking, and money laundering. He was subsequently sentenced to a "double life sentence" and 40 years in prison, which he is currently serving.
In 2020, the U.S. government seized 50,591 BTC that were allegedly stolen from Ross and Silk Road in a previous hack. As of July 28, these assets would account for approximately $3.4 billion currently held by the U.S. government.
During his Bitcoin 2024 speech, Trump promised to commute Ulbricht’s sentence if re-elected.
Even with the commuted sentence, Ulbricht’s conviction would still stand. He would essentially be released after serving his sentence, and the funds, labeled as proceeds of crime, would be wired to the U.S. government.
This is completely different from a pardon, and presidential candidate Robert F. Kennedy Jr. recently said he would pardon Ulbricht on Day 1 if elected.
A pardon would legally exonerate Ulbricht of his guilt and technically provide a legal path to rehabilitation.
However, Ulbricht reportedly signed a waiver of his claim to the funds in 2022 as part of a deal with the court to repay a $183 million restitution debt. This likely leaves him without any legal claim to the seized Bitcoin going forward.
