US Government Seizes $5 Billion Worth of Bitcoin, Becomes Major Crypto Holder

In a significant move, the US government has reportedly become one of the largest cryptocurrency holders, seizing around 200,000 bitcoins valued at billions of dollars. According to a report by the Wall Street Journal on Sunday, this information was derived from an analysis of public filings conducted by cryptocurrency firm 21.co.

Hardware wallets controlled by government agencies, including the Justice Department and the Internal Revenue Service, hold approximately 194,188 bitcoins, estimated to be worth $5.3 billion, as of 21.co's analysis. The cryptocurrency firm emphasizes that these figures are lower-bound estimations based on publicly available information regarding the US government's holdings.

The analysis by 21.co tracked the movements of Bitcoin to and from US government accounts linked to the three most significant seizures of the cryptocurrency since 2020. Notable examples include the intervention in the Bitfinex cyber-attack of January 2022, resulting in the Justice Department securing 94,643 bitcoins. In March 2022, 51,326 bitcoins were obtained in the James Zhong seizure. Additionally, the government seized 69,369 bitcoins during the notorious shutdown of the online drug marketplace Silk Road in November 2020.

The Justice Department and the Internal Revenue Service reportedly store the seized assets primarily offline in encrypted storage devices to ensure security. Periodically, the US government sells some of the seized bitcoins through an auction system based on court liquidation orders. A prominent example was in 2014 when billionaire Tim Draper acquired 30,000 tokens from government auctions.

However, recent years have seen a shift in the government's approach, with seized crypto assets sold through exchanges. Earlier this year, a sale of 9,118 bitcoins took place on Coinbase, according to a public filing.

This development underscores the government's increasing involvement in cryptocurrency and its efforts to combat cybercrime. As the US government amasses a substantial crypto portfolio, questions arise about the future management and potential impact of these holdings on the broader cryptocurrency market.