A Nevada-based venture capital firm has failed in its attempt to stop the U.S. government from selling $6.5 billion worth of Bitcoin, as per a court filing from the Northern District of California on Dec. 30. The VC firm, Battle Born Investments, had laid claim to the assets, according to a report by DB News. The Department of Justice did not immediately respond to a request for comment.
The legal decision concludes a years-long legal battle over 69,370 Bitcoins that were seized in 2020 from an unidentified hacker, who was referred to in court documents as “Individual X.” The hacker’s identity is still unknown, but federal agents were able to follow the Bitcoin in their digital wallet back to the Silk Road, a darknet drug trafficking website that was shut down in 2013.
Although the December court decision does not explicitly order the government to sell the Bitcoin, the U.S. Marshals Service has typically auctioned off cryptocurrency that was seized by federal agencies such as the FBI and the IRS, along with other assets like real estate, cars and even planes.
If the government does decide to sell the Bitcoin, it would mark one of the largest government liquidations of crypto in history — a move that could potentially trigger a strong reaction from investors, many of whom are concerned that a liquidation of this magnitude could flood the market and cause Bitcoin's price to crash. In the past, however, the government has deliberately spaced out auctions to avoid this very scenario.
The exact amount of Silk Road-related Bitcoin that the government has seized over the years is unknown, but the authorities have held several auctions to sell some of these tokens. Last month, blockchain analytics firm Arkham Intelligence reported that crypto wallets belonging to the U.S. government had moved $1.9 billion worth of Silk Road Bitcoin to crypto exchange Coinbase. This move alarmed some investors, who interpreted it as a sign that the government was preparing to sell. However, it could also be part of the government's contract with the exchange to handle their digital assets, which was announced in July.
A potential government sale of Bitcoin comes as the election of Donald Trump — a crypto enthusiast — has sparked calls for a strategic national Bitcoin reserve as a hedge against inflation. The president-elect has advised investors to “never sell your Bitcoin” and has expressed support for Wyoming Senator Cynthia Lummis' legislation, which would require the government to purchase one million Bitcoin over five years.
“I am announcing that if I am elected, it will be the policy of my administration… to keep 100% of all the Bitcoin the U.S. government currently holds or acquires into the future,” Trump stated at the Bitcoin conference in Nashville, TN, last year.
