US Court Approves Sale of $6.5 Billion in Bitcoin Seized from Silk Road. When Will the Crypto Dump Be?
The Silk Road platform was one of the first and largest marketplaces that focused on illegal goods, substances, and services. Its special feature was its work on the darknet using the Tor network, as well as the use of bitcoins to maintain the anonymity of users. The arrest of the founder Ross Ulbricht led to the forced closure of the site and the confiscation of a huge amount of BTC. Apparently, these coins will soon appear on the open market.
Silk Road Bitcoin Sales
This morning, it was announced that the U.S. District Court for the Northern District of California has approved the liquidation of Bitcoin on December 30, 2024, marking the largest cryptocurrency seizure by a federal agency, bringing a complex four-year legal battle to a close.
Chief U.S. District Judge Richard Seeborg has denied a motion to temporarily restrain the sale of 69,370 BTC, now valued at $6.48 billion, giving the Justice Department permission to dispose of the huge amount of coins.
Silk Road darknet platform interface
Why the document has surfaced on the Internet now is unknown. What is suspicious is that it happened after the sharp collapse of the coin market that has been observed over the past few days. However, the US government has previously repeatedly shared negative news after the cryptocurrency decline, which created additional uncertainty and pressure from sellers.
The source of the news was the DB News account , which received confirmation of the information from sources. Representatives of the project emphasized the importance of timing for such a decision.
In a week and a half, the US will have a new president, Donald Trump, whose administration has repeatedly stated its reluctance to get rid of confiscated cryptocurrencies. Here is a remark on this matter.
A years-long dispute over ownership of seized bitcoins has ended after Battle Born Investments was granted an injunction to try to delay the sale. The group had been claiming the rights through assets in a related bankruptcy case and had recently failed in a Freedom of Information Act request to uncover the identity of “Individual X,” who originally transferred the bitcoins.
Recall that representatives of Battle Born Investments claimed their rights to the specified amount of bitcoins, which they received during the bankruptcy case of the person considered the original owner of the coins.
“Individual X” is the anonymous person who handed over BTC to authorities in 2020. Court documents confirm that the coins belong to the Silk Road platform, which was shut down by law enforcement in 2013.
Silk Road’s Closed Darknet Market Page
Lawyers for Battle Born Investments have already called the decision “yet another egregious example of the Justice Department’s abuse of the civil asset forfeiture process,” and that the government “relied on procedural tricks to suppress certain important facts.”
It was previously believed that the seized cryptocurrency could become the basis for the national Bitcoin reserve, the creation of which Donald Trump had previously spoken about. If Cynthia Lummis’ bill is agreed upon and signed, then the US government will acquire a million bitcoins over the next five years.
Although the current development of the situation suggests that the crypto may be drained even before Donald Trump’s inauguration.
Will Bitcoin Fall Anytime Soon?
The potential sale of the said amount of coins could be one of the largest government liquidations of cryptocurrencies. However, the court’s decision does not mean an immediate sale of the coins .
As Decrypt representatives note , such a procedure requires several administrative steps and even includes time periods for appealing such a decision.
The Justice Department has gotten rid of cryptocurrencies before. Specifically, on December 3, 2024, the US government transferred $2 billion worth of BTC associated with the Silk Road platform to the Coinbase exchange.
And while 69,370 BTC is a huge amount, selling it certainly won’t mean the end of the cryptocurrency industry . Plus, some companies are buying much larger amounts of coins.
MicroStrategy, together with the famous Michael Saylor, bought 194,180 BTC during the fourth quarter of 2024. The graph also shows the pace of crypto acquisitions by MARA Holdings, Riot, Hut8 and other giants.
The scale of Bitcoin accumulation by different companies in the fourth quarter of 2024
This means that there will probably be enough people willing to absorb such a volume of bitcoins.
How much bitcoin does the US government have?
Today, the US government controls $18.99 billion worth of cryptocurrency. As the Arkham platform shows , the bulk of the $18.53 billion portfolio is in BTC.
US Government Cryptocurrency Holdings
Ethereum is in second place with a result of 181 million, and the stablecoin USDT is in third place with an equivalent of 122 million dollars.
News about possible sale of cryptocurrencies by the authorities constantly leads to excessive volatility in the market and collapses of rates. It is possible that insiders learned about what was happening earlier, whose activity became another reason for the current drawdown of the industry.
However, eventually the sales will end, and Bitcoin will have conditions for growth. After all, in the summer the German government dumped 50 thousand coins at $57 thousand each, which ultimately did not prevent BTC from making almost two X’s since then.
