Article source: Weilin
Author: Weilin, PANews
On January 9, according to DB News, the U.S. DOJ has been authorized to sell $6.5 billion worth of bitcoins seized from the Silk Road dark web market. Once the news broke, the price of bitcoin fell from $950,000 to below $940,000, and as of January 9, 1:05 PM, it rebounded to $94,258, down 1.93% for the day.
It's worth noting that when this news broke, it was less than two weeks since Trump's new government officially took office, and Trump had vowed at last year's Bitcoin conference not to let the U.S. government sell any bitcoins, promising to list bitcoin as a strategic reserve asset of the U.S.
However, according to analysis from on-chain monitoring platforms, it is expected to take the U.S. government several months to begin liquidating the bitcoins seized from Silk Road, and it is generally believed that the selling pressure will be quickly absorbed by the market.
The DOJ has been authorized to liquidate the bitcoins seized from Silk Road.
On October 7 of last year, the U.S. Supreme Court declined to hear the case of Battle Born Investments regarding the ownership of 69,370 BTC (approximately $4.33 billion) seized from Silk Road, thereby allowing the government to have full control over the seized funds. The court's decision likely paved the way for the U.S. government to sell these bitcoins. At that time, the valuation of these bitcoins was $4.4 billion. The U.S. Marshals Service is expected to be responsible for managing the liquidation process. Once confirmed, this will become one of the largest cryptocurrency sales of seized assets in history.
According to DB News, here are the key points of the event:
Official confirmation: On December 30, 2024, a U.S. federal judge ruled that the Department of Justice (DOJ) could sell 69,370 bitcoins seized from the Silk Road dark web market.
The years-long dispute over the ownership of these seized bitcoins comes to an end, with Battle Born Investments failing to delay the sale. The company had claimed ownership of these bitcoins through bankruptcy estate and lost a lawsuit under the Freedom of Information Act (FOIA), failing to reveal the identity of 'Mr. X,' who initially surrendered the bitcoins.
Battle Born's lawyers described this matter as 'another example of the DOJ abusing civil asset forfeiture procedures' and accused the government of 'relying on procedural tricks to ensure the truth never sees the light of day.'
The U.S. DOJ pushed to obtain permission to sell these assets citing bitcoin price volatility. When asked about the next steps, a DOJ spokesperson stated, 'The government will continue to advance related work based on the ruling of this case.'
The seized bitcoins are currently valued at approximately $6.5 billion.
The court's ruling effectively upheld the decision made by the U.S. District Court for the Northern District of California in 2022, ordering the government to liquidate these bitcoins based on current laws. The case was brought by Battle Born Investments, which argued that it had rights to these bitcoins obtained through a bankruptcy estate related to Silk Road. Battle Born claimed that these bitcoins were stolen by an individual referred to as 'Individual X', who allegedly took the funds from Silk Road.
Less than two weeks after the Trump administration took office, its crypto promises face an awkward situation.
Dramatically, this is less than two weeks after the new Trump administration officially took office, and Trump had vowed not to sell any bitcoins.
As early as last July, when Trump attended the Bitcoin conference, he stated he would lighten the sentence of Silk Road founder Ross Ulbricht. Ulbricht was sentenced to life in prison for operating the 'Silk Road market,' where customers used virtual currencies to purchase illegal drugs and hacking tools.
At last year's Bitcoin conference, Trump vowed that if he could return to the White House, he would ensure the government retains 100% of its bitcoins and would list bitcoin as a strategic reserve asset of the U.S. 'For a long time, our government has been violating a fundamental rule that every bitcoin player remembers: Never sell your bitcoins,' Trump said during his keynote speech at the Bitcoin conference in Nashville.
Silk Road is the first modern dark web marketplace. It was created in 2011 by its American founder Ross Ulbricht under the pseudonym 'Dread Pirate Roberts.' The market operated as a hidden service via the Tor network, allowing users to anonymously buy and sell goods and services. All transactions were conducted using bitcoin. The site was infamous for its illegal drug trading market, but also included other illegal and legal goods. From February 2011 to July 2013, Silk Road traded approximately 95,200 bitcoins.
In October 2013, the FBI shut down the Silk Road website and arrested Ulbricht. In November of the same year, Silk Road 2.0 launched, operated by other administrators of the original site, but was shut down again the following year due to 'Operation Onymous.' In 2015, Ross Ulbricht was convicted in federal court on multiple charges related to running Silk Road and was sentenced to two life terms without parole.
Industry executives: Call for no panic, the bottom-fishing moment may be coming
On January 9, on X, on-chain analyst Trader T stated that it may take months from the authorization to the actual sale regarding 'the U.S. government has been authorized to liquidate 69,370 BTC seized from the dark web Silk Road.'
Additionally, Spot On Chain stated that the U.S. government currently holds about 197,000 BTC, as previous sales were conducted through over-the-counter transactions, which did not directly affect prices but may have caused market panic leading to a temporary price drop.
HODL15Capital mentioned in an analysis that the BTC held by the U.S. has not been transferred or sold on-chain.
CryptoQuant CEO Ki Young Ju posted on X stating, 'Based on actual market value, the funds entering the market last year amounted to $379 billion, roughly $1 billion per day. The $6.5 billion sold by the U.S. government could be absorbed in just a week. Don't panic.'
On January 9, regarding the 'U.S. DOJ authorized to sell $6.5 billion worth of seized Silk Road bitcoins,' BitMEX co-founder Arthur Hayes posted on X that diamond hands are ready to bottom fish.
