Author: Weilin, PANews
On January 9, according to DB News, the U.S. Department of Justice has been authorized to sell $6.5 billion worth of bitcoins seized from the Silk Road dark web market. Upon the news breaking, the price of bitcoin fell from $950,000 to below $940,000, and as of January 9 at 1:05 PM, it rebounded to $94,258, down 1.93% for the day.
Notably, this news broke less than two weeks after 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 and promised to list bitcoin as a strategic reserve asset for the U.S.
However, at this point, this ruling alone does not guarantee immediate liquidation, as U.S. federal asset forfeiture involves multiple administrative steps and potential appeal windows. According to analysis by on-chain monitoring platforms, it is expected to take months for the U.S. government to begin liquidating bitcoins seized from Silk Road, and there is a general belief that the selling pressure will be quickly absorbed by the market.
Department of Justice authorized to liquidate seized Silk Road bitcoins
On October 7 last year, the U.S. Supreme Court declined to hear Battle Born Investments' case concerning the ownership of 69,370 BTC (approximately $4.33 billion) seized from Silk Road, thereby granting the government full control over the seized funds. The court's decision likely paves the way for the U.S. government to sell these bitcoins. At that time, these bitcoins were valued at $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 seized cryptocurrency sales in history.
According to DB News, here are the key points of the event:
· Official confirmation that a U.S. federal judge ruled on December 30, 2024, that the U.S. Department of Justice (DOJ) can sell 69,370 bitcoins seized from the Silk Road dark web market.
· The long-standing controversy over the ownership of these seized bitcoins ends, with Battle Born Investments failing to delay the sale. The company previously claimed to own these bitcoins through a bankruptcy estate and lost a Freedom of Information Act (FOIA) lawsuit that failed to disclose the identity of the original surrenderer of the bitcoins, referred to as "Mr. X."
· Battle Born's lawyer claimed this case is "another example of the DOJ abusing civil asset forfeiture procedures" and accused the government of "relying on procedural tricks to ensure that the truth is never made public."
· The U.S. Department of Justice pushed to obtain permission to sell these assets citing bitcoin price volatility. When asked about the next steps, a DOJ spokesperson said: "The government will continue to move forward with related work based on the court's ruling."
· These seized bitcoins are currently valued at approximately $6.5 billion.
The court ruling effectively upheld a decision made by the U.S. District Court for the Northern District of California in 2022, ordering the government to liquidate these bitcoins under current law. The case was brought by Battle Born Investments, which argued that it obtained rights to these bitcoins through a bankruptcy estate associated with Silk Road. Battle Born claimed that these bitcoins were stolen by an individual known as "Individual X," who allegedly siphoned off funds from Silk Road.
Less than two weeks into the Trump administration, its cryptocurrency commitment faces an awkward situation.
Dramatically, this comes 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 ease 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 currency 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 bitcoin holdings and would list bitcoin as a strategic reserve asset for 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 address at the Bitcoin conference in Nashville.
Silk Road was the first modern dark web market. Founded in 2011 by its American creator Ross Ulbricht under the pseudonym "Dread Pirate Roberts," this market operated as a hidden service on the Tor network, allowing users to anonymously trade goods and services. All transactions were conducted using bitcoins. The site was notorious for its illegal drug trade, though it also included other illegal and legal goods. From February 2011 to July 2013, Silk Road traded approximately 95,200 bitcoins.
In October 2013, the Federal Bureau of Investigation (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 operating Silk Road and was sentenced to two life sentences without parole.
Industry executives: call for calm, as buying opportunities may arise.
On January 9, on the X platform, on-chain analyst Trader T stated that regarding the "U.S. government has been authorized to liquidate 69,370 BTC seized from the Silk Road dark web," it may take months from authorization to actual sale.
Moreover, Spot On Chain stated that the U.S. government currently holds about 197,000 BTC, and previous sales were completed through over-the-counter trading, so they did not directly affect prices, but the resulting market panic may have caused a temporary drop in prices.
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 capitalization, the funds entering the market last year amounted to $379 billion, approximately $1 billion per day. The $6.5 billion sold by the U.S. government can be absorbed in just one week. Don’t panic."
On January 9, regarding the "U.S. Department of Justice authorized to sell $6.5 billion in seized Silk Road bitcoins," BitMEX co-founder Arthur Hayes posted on X, stating that diamond hands are ready to buy the dip.
