Based on a report from The Wall Street Journal, it’s been uncovered that the United States government possesses a whopping $5 billion in Bitcoin.
How the U.S. Got Crypto
Rather than accruing Bitcoin through market purchases, the U.S. government’s substantial cache of nearly 200,000 Bitcoin has been predominantly amassed from seizures involving cybercriminals and illicit online activities. These digital assets are securely stored in encrypted, offline devices known as hardware wallets, safeguarded by authoritative bodies like the Justice Department and the Internal Revenue Service.
Not Selling, Just Holding
Contrary to speculative investors in cryptocurrency, the U.S. government’s retention of Bitcoin doesn’t hinge on market fluctuations. The significant Bitcoin reserve is less about investment strategy and more a consequence of protracted legal procedures. As Jarod Koopman, a top official at the IRS, clarified to the WSJ, the government’s actions are dictated by its operational timelines, not market dynamics.
Recent enforcement actions have considerably bolstered the government’s Bitcoin coffers. An analysis by the cryptocurrency firm 21.co indicated that the government’s recent seizures added over 200,000 Bitcoin. After divesting a portion, the remaining assets still approximate a value of $5 billion.
Benefit from Market Volatility
On occasions, the time taken for legal processes has inadvertently favored the government. For instance, in 2016, after a security breach at the Bitfinex exchange attributed to Ilya Lichtenstein, the value of Bitcoin was approximately $600.
Fast forward to 2022; by the time the U.S. authorities apprehended Lichtenstein and his associate, Heather Morgan, and executed a significant Bitcoin seizure, the cryptocurrency’s value had surged to $44,000. Presently, it stands at roughly $27,000.
Liquidation Challenges
The U.S. government’s acquisition of Bitcoin doesn’t immediately translate to ownership. An official legal mandate is required, and the responsibility of liquidating the seized assets falls to the U.S. Marshals Service.
Previously, the Marshals Service organized exclusive auctions to offload these cryptocurrencies. However, in January 2021, a shift was observed as they commenced liquidating some of their seized cryptocurrencies via online exchanges, such as Coinbase, taking cautious measures to minimize market disruptions.
