U.S. Government to Sell $130 Million Bitcoin Seized in Silk Road Case
The United States government’s intention to auction off nearly $118 million worth of seized Silk Road Bitcoin (BTC) has surfaced as a topic of discussion within the cryptocurrency community.
Market commentators, however, downplay concerns over potential market impacts, emphasizing the relatively small scale of the sale.
The notice, issued on January 10, revealed the government’s plan to dispose of 2,934 BTC following the sentencing of Silk Road Xanax dealer Ryan Farace and his father Joseph Farace for money laundering conspiracy on January 8.
Despite initial concerns about a possible “dump” of Bitcoin, experts like Steven Lubka, managing director at Bitcoin exchange Swan Bitcoin, dismissed the auction’s impact as minimal compared to recent outflows from the Grayscale Bitcoin Trust (GBTC).
Lubka stated, “Peanuts, we have been eating GBTC sales 4x this for breakfast,” pointing out that the GBTC has sold 106,575 BTC worth $4.2 billion since its conversion to a spot Bitcoin exchange-traded fund on January 11.
The U.S. government’s planned sale accounts for just 1.5% of its total holdings of 194,188 BTC, acquired through three seizures in criminal cases, including the 2016 Bitfinex hack, Silk Road seizures, and the case of Silk Road hacker James Zhong. This constitutes less than 1% of Bitcoin’s circulating supply.
Approximately 41,000 BTC is set to be offloaded in four sales throughout 2023. Historically, the U.S. government has occasionally auctioned Bitcoin, with notable instances like venture capitalist Tim Draper’s purchase of nearly 30,000 BTC in a 2014 auction.
Recent changes in the government’s approach include selling seized crypto on exchanges instead of through auctions. The last known sale involved 9,118 BTC in March 2023.
The government has now filed a notice to sell $130 million worth of Bitcoin, which allows other individuals, excluding defendants, to claim interest in the forfeited property within 60 days of January 10. It also permits petitions for remission or mitigation, offering potential avenues for pardoning some or all of the seized Bitcoin from forfeiture.
The Bitcoin in question was previously owned by Ryan Farace and Sean Bridges, the latter being a former U.S. Secret Service Special Agent involved in Silk Road investigations.
The funds constitute a fraction of Silk Road-related seizures, with the U.S. government holding about $9 billion worth of Bitcoin as of December 2023, derived from various cases beyond Silk Road.
