US Government Holds Shocking $5 Billion in Bitcoin! Where Did It Come From?

A recent report from The Wall Street Journal reveals that the United States government possesses a significant $5 billion in Bitcoin.

In contrast to regular investors who buy Bitcoin on the market, the U.S. government’s hefty pile of almost 200,000 Bitcoins comes from seizing assets linked to cybercrime and illegal online activities. These digital assets are safely stored in encrypted offline devices called hardware wallets, protected by agencies like the Justice Department and the Internal Revenue Service (IRS).

Not Selling, Just Holding

Unlike typical cryptocurrency investors who ride the market’s ups and downs, the U.S. government’s Bitcoin stash isn’t affected by price swings. It’s not an investment strategy; rather, it’s the result of long legal procedures. As per Jarod Koopman, a senior official at the IRS, the government’s actions depend on its timelines, not market trends.

In recent years, the U.S. government’s Bitcoin holdings have grown significantly due to various law enforcement actions. According to cryptocurrency firm 21.co’s analysis, these recent seizures have added over 200,000 Bitcoins to the government’s reserves. Even after selling some, the remaining assets are still worth a substantial $5 billion.

Taking Advantage of the Volatility

In some cases, the government has benefited from the time taken for legal procedures. For instance, in 2016, after a security breach at the Bitfinex exchange attributed to Ilya Lichtenstein, the Bitcoin’s value was around $600.

Fast forward to 2022; when U.S. authorities apprehended Lichtenstein and his associate, Heather Morgan, and executed a significant Bitcoin seizure, the cryptocurrency’s value had risen to $44,000. Today, it’s at about $27,000.

Liquidation Challenges

The U.S. government’s acquisition of Bitcoin doesn’t immediately translate to ownership. An official legal mandate is required, and the responsibility of liquidating the seized assets falls to the U.S. Marshals Service.

In the past, the Marshals Service held exclusive auctions to sell these cryptocurrencies. But in January 2021, they started selling some of their seized cryptocurrencies through online exchanges like Coinbase, making efforts to avoid disrupting the market.