The U.S. Department of Justice (DOJ) has received court approval to liquidate approximately 69,370 Bitcoin, worth about $6.5 billion, which could mark one of the largest cryptocurrency sales in history. Seized from the Silk Road black market, the Bitcoin stash has become the focal point of a protracted legal battle.
The court ruling on December 30 dismissed claims from Battle Born Investments, a Nevada-based company that sought ownership through a bankruptcy estate and attempted to delay the sale. The U.S. Federal Bureau of Investigation is expected to oversee this process, although federal asset seizure procedures require several administrative steps before the sale can be finalized. Approximately $2 billion of seized Silk Road Bitcoin was transferred to Coinbase on December 3, 2024, indicating preparations for their liquidation.
The Legal Story
The origin of this Bitcoin stash dates back to when Silk Road closed in 2013 after being established in 2011. Silk Road was a darknet marketplace that facilitated illegal transactions. This specific Bitcoin is linked to a wallet known as "1HQ3," controlled by an individual referred to in court documents as "Person X." Battle Born Investments claims ownership of the Bitcoin through a 2018 agreement to acquire assets related to a bankrupt property.
After years of litigation, the U.S. District Court for the Northern District of California ruled in 2022 that Bitcoin is subject to government seizure. This decision was upheld by the Ninth Circuit Court of Appeals in August 2023, which stated that Battle Born lacked standing to contest the seizure. After a series of appeals, the Supreme Court denied Battle Born's certiorari petition on October 7, 2024, effectively paving the way for the U.S. government to sell the asset.
Bitcoin Price Under Pressure
While the exact timing of the liquidation remains uncertain, traders and market participants are increasingly concerned about the potential downward price pressure that this significant sell-off could cause.
For example, in October 2024, the price of Bitcoin dropped 2% when the Supreme Court declined to hear Battle Born's appeal. At that time, Bitcoin was trading at $60,900, with the broader cryptocurrency market witnessing a 3% decline in total market capitalization.
Currently, Bitcoin is trading at $93,912, reflecting a 1.65% decrease in the past 24 hours and a 1.84% decrease over the past week. Market analysts are concerned that the influx of over $6 billion in Bitcoin could exacerbate price volatility in the short and long term.
With President-elect Donald Trump set to take office in less than two weeks, the timing of this decision adds political complexity. Trump, a Bitcoin supporter, has previously endorsed the idea of a national Bitcoin reserve fund. At a conference in Nashville in July 2024, he urged Bitcoin holders to hold on and introduced plans for a strategic "Bitcoin reserve vault."
However, the DOJ's decision to proceed with the sale seems to contradict these wishes. The upcoming Trump administration may face criticism for allowing the liquidation of a large amount of seized Bitcoin instead of retaining it as a strategic asset.