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Seized Bitcoins: Did the U.S Marshals Service miss out on $1.7 million?

Chayanika Deka

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Source: Pixabay

The world’s largest cryptocurrency, Bitcoin, has had a productive 2020, with the cryptocurrency’s price breaching $10k for the first time in months. While the crypto’s volatility has been beneficial for the ones who have longed for Bitcoin, it hasn’t been quite the same for those who sold their Bitcoins just before the rally. The case of US Marshals auctioning of Bitcoins that were forfeited over the course of various federal criminal, civil, and administrative cases is one such example.

The US Marshals Service recently revealed the auctioning of 4,041.58424932 Bitcoin for $38 million in the first week of February, a time when the coin was still valued at below $9.2k.

According to Jameson Lopp, Co-founder and CTO of Casa, the federal law enforcement agency missed out on more than $1.7 million by auctioning it off early. There may be some truth to what Lopp claims as since the aforementioned Bitcoins were sold, the world’s largest cryptocurrency has surged in its valuation, while also briefly crossing its psychological resistance of $10K.

However, the U.S government does not believe in ‘Hodling‘ anyway and the seized Bitcoins are typically sold off in auctions by the U.S. Marshals Service. While it’s not difficult to see why the U.S Government does not get hyped over the price of Bitcoin, the U.S government has been criticized in the past for selling seized Bitcoins at a throwaway price.

Further, this isn’t the first case where the U.S government has missed out on a considerable amount. The U.S. Department of Justice could have made ten times more profit from the 144,336 Bitcoins seized from Ross Ulbricht, the creator of the infamous dark web black market, Silk Road.

According to Forfeiture.gov, a website managed by the Department of Justice, Asset Forfeiture Management Staff, 3.79516 BTC, 139.42 LTC, 64.52 Monero, and 3.77 BCH were seized on 31 October 2019 by the Drug Enforcement Agency [DEA]. Around the same time, the Federal Bureau of Investigation [FBI] also forfeited 0.0368 BTC.

In another case of market volatility affecting the valuation of funds, a Bitcoin-only charity called the ‘Pineapple Fund,’ while initially anticipating funds worth around $86 million, fell victim to a major crypto-crash following which, the valuation of the funds fell to $55million.

It must be noted however that the auction of seized Bitcoins isn’t particular to the United States alone. Ernst and Young in 2017 had announced the auction of 24,518 BTC which were “confiscated as proceeds of crime” by the Australian police. In 2018, Bulgaria’s law enforcement agencies seized nearly 213,000 BTC, which according to sources, were also auctioned.

Chayanika is a full-time cryptocurrency journalist at AMBCrypto. A graduate in Political Science and Journalism, her writing is centered around regulation and policy-making regarding the cryptocurrency sector.