In recent years, Bitcoin holdings in the US Treasury have risen exponentially, making the US government reportedly the largest BTC reserves in the world. This is primarily due to three significant seizures from criminal cases. As of this writing, the US treasury is estimated to have at least 194,188 BTC tokens.
The first seizure was from the Silk Road marketplace, a dark web marketplace where people sold drugs and other illegal goods online. In 2021, prosecutors seized over a million bitcoins stolen by Dmitry “ULBRICHT” Ulbricht, who ran the site. According to a press release from the Department of Justice, he had used a sophisticated scheme to steal the cryptocurrency from users of his site.
He allegedly created nine fraudulent accounts on Silk Road, funding each with between 200 and 2,000 bitcoins. Then he triggered a series of withdrawals in less than five seconds, which tricked the marketplace’s system into withdrawing many times more bitcoin than he had deposited into each account. He then transferred the cryptocurrency to various wallet addresses that he controlled.
ULBRICHT used the same type of encryption people use to secure their bank accounts to hide their identity and protect their assets. He aimed to sell drugs and other illegal goods on the site without being caught by law enforcement. He did this by using the Tor network, which consists of thousands of servers around the globe that hide the identities of users. He also tried to make it harder for law enforcement to track the money he was making by requiring customers to pay with Bitcoin.
After the sting, the federal government auctioned off the stolen bitcoins. Since then, the crypto market has soared, and those bitcoins would be worth more than $5 billion today. But the Treasury has held onto its stash of 207,189 bitcoins, which may represent inertia more than strategy.
If the Treasury decides to sell its bitcoins, it will do so in a process similar to how it sold off other seized property. The government will auction off the cryptocurrency in blocks and do its best to avoid selling at a time when prices are high. Koopman says trying to “time the market” to sell when Bitcoin is at a peak isn’t its objective.
When the government does sell off its bitcoins, it will likely put the proceeds into its forfeiture fund. A decades-old statute requires that funds go toward law enforcement purposes, including building prisons, contributing to law enforcement training, and providing restitution to victims. In addition, local law enforcement agencies contributing to a case can get up to 80 percent of the money from a sale. So if the Treasury does decide to sell its bitcoins, those dollars will go to local police departments that need them most. In short, the US government is a prominent bitcoin holder—and probably the most significant private holder.
