Despite the unexpected nature of such news, the U.S. government, a significant holder of bitcoins, frequently features in headlines concerning its connection to cryptocurrency.
Comprised of a law enforcement agency under the Department of Justice, the U.S. Marshals Service primarily handles the auctioning of seized bitcoins. U.S. law enforcement has, at times, possessed over $1 billion in digital currency, cementing the U.S. Marshals Service’s influential role in the crypto world.
The sale of confiscated assets such as valuable items and metals is a common practice among various U.S. government agencies. Cryptocurrencies, however, introduce a unique challenge due to their price unpredictability, leading to unusual scenarios and inquiries.
Concerns have been raised regarding the government’s strategy, as strategically selling appreciated bitcoins could boost agency budgets. Nevertheless, criticism arises from instances where bitcoins were sold at undervalued prices.
Interestingly, an attempt was made to emulate Draper’s approach when bitcoin hovered near $20,000 in December 2017, with government efforts to sell 513 coins. By the time approvals were in place mid-January, bitcoin values had drastically fallen by around 50%.
A January 2018 Manhattan case further underscores these challenges. Local officials, dealing with an ether-related kidnapping and burglary, faced a dilemma over profits from increased bitcoin values after the suspect wisely converted ether to bitcoin.
Delving into public records, one might expect to discover the government’s bitcoin reserves through the platform documenting Justice Department forfeiture actions. However, there are delays from seizure to publication, with no online archives or paper trails, complicating the task of determining bitcoin ownership.
Over time, different agencies have seized bitcoins, further muddling the situation. This lack of transparency in the government’s bitcoin holdings significantly impacts the overall crypto ecosystem’s transparency, an element vital for establishing rightful ownership.
A case from 2014, highlighted by Fortune, exemplifies this opacity. During that year, 322 bitcoins seized from a Texas marijuana dealer remain unaccounted for, suggesting these could belong to inactive addresses potentially leaving circulation.
Arvind Narayanan, from Princeton, earlier this year, presented findings on lost and irrecoverable coins. He pointed out the common narrative of lost private keys, highlighting the challenge of estimating the volume of such ‘burnt’ cryptocurrencies.
Investing in cryptocurrencies and Initial Coin Offerings (ICOs) is fraught with risk and speculation, cautioning that this text does not serve as investment advice. A financial advisor should be consulted due to individual variances, as neither the writer nor the publication guarantees the information’s accuracy or timeliness. Notably, the author holds minor bitcoin investments, as of this writing.
