US Government Has Over $4.4 Billion In BTC It Could Dump

November 7, 2022 10:00 pm Comments

So far, data shows that the federal government has become one of the largest Bitcoin whales over the years due to the fact that it has seized a significant amount of illegally obtained funds in the asset.

The total amount it has now is over $4.4 billion in BTC and speculators believe that it will likely dump these assets onto the markets soon.

With that being said, it will likely be done via private auctions and not directly on crypto exchanges so the effect may not be as large as anticipated.

Still, the news of this happening may be a large catalyst which may cause the markets to react either positively or negatively. reports:

The United States government owns an enormous amount of Bitcoin.

Today, the Department of Justice (DOJ) announced that it seized a little over 50,676.17 BTC (worth roughly $1 billion at today’s prices) in November 2021 from a Bitcoin trader named James Zhong.

Zhong obtained the sum by defrauding darknet marketplace Silk Road by exploiting the platform’s withdrawal mechanism in September 2012; he pleaded guilty to one count of wire fraud last week, on November 4, 2022.

The DOJ publicized the confiscation as a $3.36 billion haul, which, while correct at the time of the enforcement action, fails to take into account that Bitcoin is now down 69% from its all-time high.

Nevertheless, the seizure is notable—it’s the third largest in cryptocurrency history by Crypto Briefing’s count—especially considering the amount of Bitcoin the U.S. government already has under its control.

In total, the government is owning around 214,046 BTC which makes it a very large whale and there seems to be only one other BTC wallet that is bigger than this amount.

That wallet is labeled as Binance’s cold storage wallet which is reported to store around 252,597 BTC which stores the crypto of Binance customers.

Whales will often not have all of their crypto in a single wallet though so it is likely that these large wallets do not paint a wholistic picture of whale activity.

Instead, much of the capital will be spread across multiple wallets so that the risk is distributed and diversified.

CryptoBriefing concludes:

Typically, the U.S. government liquidates its Bitcoin holdings through the U.S. Marshalls Service through public auctions.

For example, Venture Capitalist Tim Draper famously bought 30,000 BTC from the government in 2014 for about $18.5 million—or approximately $616 per coin. Most likely, the BTC seized by the DOJ will be similarly offered to the public.

In recent years, the DOJ has tried to time its auctions according to market gyrations to sell its holdings for the highest price possible.

In November 2021, it auctioned off $56 million worth of cryptocurrencies seized from a BitConnect promoter, successfully liquidating the holdings at the height of the bull market. Whether the agency will have the patience to wait for Bitcoin to rise again before selling its holdings is yet to be seen. So far, it has restrained itself from liquidating the proceeds from the Individual X and Razzlekhan confiscations.

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