US Government Has $5 Billion Worth of Bitcoin – Here’s How It Happened

Jimmy Aki
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The United States government has become one of the world’s largest Bitcoin (BTC) holders, having acquired approximately 215,000 coins valued at around $5 billion. This accumulation stems from seizures associated with criminal activities, firmly establishing the government as a major BTC holder on a global scale.

US Government Holds Over 200,000 Bitcoins

According to a recent report by The Wall Street Journal (WSJ), the US government has accumulated Bitcoin valued at $5 billion.

An analysis of public filings conducted by the cryptocurrency firm 21.co revealed that this accumulation results from the seizure of approximately 215,000 BTC, originating from cybercriminals and activities on the darknet.

The analysis closely monitored the movements of Bitcoin within US government wallets linked to the three most substantial Bitcoin seizures since 2020. These seizures involved the Silk Road in November 2020 (69,369 BTC), the

Bitfinex Hack in January 2022 (94,643 BTC), and the James Zhong seizure in March 2022 (51,326 BTC).

According to 21. co’s estimates, the government still holds approximately 194,188 BTC, currently valued at around $5.3 billion, even after offloading some of its holdings. The US government’s overall Bitcoin stash is likely even more substantial.

These digital assets are primarily stored offline in encrypted, password-protected hardware wallets. Furthermore, agencies like the Justice Department and the Internal Revenue Service (IRS) manage the coins in these hardware wallets.

What Does the US Government Do With Its Bitcoins?

The approach of the US government towards its Bitcoin holdings has stirred considerable interest among cryptocurrency traders. This intrigue stems from the potential for any decision regarding liquidating these assets to influence market prices.

However, as noted by the WSJ, the government has been slow in converting its Bitcoin holdings into dollars.

In addition, it is not engaging in ‘HODLing,’ – a crypto slang that means holding onto assets without the intent to sell – nor is it waiting for the asset to reach astronomical values before selling.

Instead, this substantial Bitcoin stash primarily results from the lengthy legal processes associated with criminal seizures.

Jarod Koopman, the executive director of the IRS’s cyber and forensics services section, said, “We don’t actively trade in the market. Our actions are primarily dictated by the timing within our procedural processes.”

According to the WSJ, when a crypto asset is taken under the control of a US government agency, immediate ownership of the asset is not assumed. It is only after a court issues a final forfeiture order that the government gains possession and transfers the tokens to the US Marshals Service.

Furthermore, when the legal case is ongoing, the government retains the digital asset as evidence or as the proceeds of criminal activity.

The Justice Department has been storing BTC seized in hardware wallets ever since the shutdown of the online illicit marketplace Silk Road in 2013.

However, the approach of the Marshals Service to liquidation has evolved in sync with the growth of the cryptocurrency industry.

In the early days of cryptocurrencies, the agency conducted auctions to directly sell these digital assets to interested buyers, many of whom saw significant profits on paper.

For instance, venture capitalist Tim Draper, who has amassed substantial wealth through cryptocurrency investments, acquired over 30,000 BTC from the government in two auctions held in 2014.

In recent years, the US government has shifted its strategy to utilize crypto exchanges for selling seized Bitcoin as opposed to conducting public auctions.

One such instance occurred in March of this year when the government sold 9,118 BTC on Coinbase, as confirmed through a public filing.

About Jimmy Aki PRO INVESTOR

Based in the UK, Jimmy is an economic researcher with outstanding hands-on and heads-on experience in Macroeconomic finance analysis, forecasting and planning. He has honed his skills having worked cross-continental as a finance analyst, which gives him inter-cultural experience. He currently has a strong passion for regulation and macroeconomic trends as it allows him peek under the global bonnet to see how the world works.