Are Uncle Sam’s Bitcoin holdings a cause for FUD?

The U.S. government held around 1% of all BTC in circulation.
Concerns grew about how Bitcoin would be impacted if the government decided to liquidate its holdings.

Despite the U.S. government’s strict regulatory stance on Bitcoin [BTC], it remains one of the largest BTC holders in the world.

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US becomes largest HODLer

According to data from The Wall Street Journal, recent seizures added approximately 200,000 Bitcoins, valued at over $5 billion, to the U.S. government’s holdings. These were primarily stored in hardware wallets controlled by agencies like the Ministry of Finance and the IRS.

This government-held BTC constitutes around 1% of all Bitcoins in circulation, raising concerns about the impact on the cryptocurrency’s price if these holdings are eventually sold off simultaneously.

These holdings were primarily the result of seizures related to criminal investigations.

Bitcoin’s decentralized nature made it appealing to criminals, particularly in its early days, for activities such as money laundering, drug trafficking, and ransomware attacks.

A long list

To combat these illicit activities, the U.S. government has been tracking criminals and confiscating their ill-gotten BTC. This approach allowed the government to accumulate significant amounts of Bitcoin without entering the open market.

The majority of these holdings resulted from three significant seizures.

The first occurred in 2020 when the U.S. Attorney’s Office in California seized 69,370 Bitcoins from an individual known as “Individual X,” who had stolen the assets from the Silk Road dark net.

In February 2022, the Department of Justice confiscated 94,636 stolen Bitcoins from the Bitfinex exchange, arresting Ilya Lichtenstein and Heather Morgan for their involvement in the hack and charging them with conspiracy to commit money laundering.

Another major seizure took place in November 2022 when the U.S. Attorney’s Office in New York announced a $3.3 billion cryptocurrency seizure from fraudster James Zhong, who had illicitly acquired over 50,000 Bi

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Author: Himalay Patel

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