Author: Weilin, PANews
On January 9, according to DB News, the U.S. Department of Justice has been approved to sell $6.5 billion worth of Bitcoin seized from the Silk Road dark web market. Once the news was exposed, the price of Bitcoin fell from $950,000 to below $940,000. As of 13:05 on January 9, it rebounded to $94,258, a daily drop of 1.93%.
It is worth noting that the news was revealed less than two weeks after the new Trump administration officially took office. At last year's Bitcoin conference, Trump vowed not to allow the US government to sell any Bitcoin and promised to list Bitcoin as a US strategic reserve asset.
But at present, the ruling alone does not guarantee immediate liquidation, as the U.S. federal asset forfeiture involves multiple administrative steps and potential appeal windows. According to the analysis of the on-chain monitoring platform, it is expected that it will take several months for the U.S. government to begin liquidating the Bitcoin seized from the Silk Road, and the analysis generally believes that the selling pressure will be quickly digested by the market.
Justice Department gets approval to liquidate Silk Road seized Bitcoin
On October 7 last year, the U.S. Supreme Court refused to hear Battle Born Investments' case regarding the ownership of 69,370 BTC (about $4.33 billion) seized from Silk Road, giving the government full control of the seized funds. The court's decision is likely to pave the way for the U.S. government to sell these bitcoins. At the time, these bitcoins were valued at $4.4 billion. The U.S. Marshals Service is expected to be responsible for managing the liquidation process. Once confirmed, this will be one of the largest sales of seized cryptocurrency in history.
According to DB News, here are the key takeaways from the incident:
A federal judge ruled on December 30, 2024 that the U.S. Department of Justice (DOJ) can sell 69,370 bitcoins seized from the Silk Road darknet marketplace, officials confirmed.
A years-long dispute over the ownership of the seized bitcoins ended when Battle Born Investments failed to delay the sale after the company claimed it owned the bitcoins through a bankruptcy estate and lost a Freedom of Information Act (FOIA) lawsuit to reveal the identity of “Mr. X” who originally handed over the bitcoins.
Battle Born’s attorneys called the case “yet another example of the Department of Justice abusing the civil asset forfeiture process” and accused the government of “relying on procedural tricks to ensure the truth never comes to light.”
The U.S. Department of Justice has pushed for permission to sell the assets, citing bitcoin price volatility. When asked about next steps, a Justice Department spokesperson said: “The government will continue to move forward based on the ruling in this case.”
The seized Bitcoins are currently valued at approximately $6.5 billion.
The court's ruling effectively upholds a 2022 ruling by the U.S. District Court for the Northern District of California, ordering the government to liquidate the bitcoins under existing law. The case was brought by Battle Born Investments, which argued that it acquired the rights to the bitcoins through a bankruptcy estate associated with Silk Road. Battle Born said the bitcoins were stolen by an individual known as "Individual X," who allegedly stole the funds from Silk Road.
Less than two weeks into the Trump administration, its commitment to encryption faces an awkward moment
What is dramatic is that this happened less than two weeks after the new Trump administration took office in the United States, and Trump had vowed not to sell any Bitcoin.
As early as July last year, when Trump attended the Bitcoin Conference, he said he would commute the sentence of Silk Road founder Ross Ulbricht. Ulbricht was sentenced to life in prison for operating the "Silk Road Market", a dark web where customers used virtual currency to buy illegal drugs and hacking tools.
At last year's Bitcoin conference, Trump vowed that if he could return to the White House, he would ensure that the government kept 100% of its Bitcoin and would list Bitcoin as a strategic reserve asset for the United States. "For too long, our government has been violating a basic rule that every Bitcoin player has memorized: Never sell your Bitcoin," Trump said during a keynote speech at the Bitcoin conference in Nashville.
Silk Road was the first modern darknet market. It was created in 2011 by its American founder Ross Ulbricht, using the pseudonym "Dread Pirate Roberts". The market was run as a hidden service over the Tor network, allowing users to anonymously buy and sell goods and services. All transactions were conducted using Bitcoin. The site was known for its illegal drug marketplace, but also included other illegal and legal goods. Between February 2011 and July 2013, Silk Road traded approximately 95,200 Bitcoins.
In October 2013, the FBI shut down the Silk Road website and arrested Ulbricht. In November of the same year, Silk Road 2.0 was launched and operated by other administrators of the original website, but it was shut down again the following year due to "Operation Onymous". In 2015, Ross Ulbricht was convicted in federal court for multiple counts of operating Silk Road and was sentenced to two life sentences without parole.
Industry executives: Don’t panic, the time to buy at the bottom may come
On January 9, on-chain analyst Trader T said on the X platform that "the US government has been approved to liquidate 69,370 BTC seized from the dark web Silk Road", and it may take several months from approval to actual sale.
In addition, Spot On Chain stated that the US government currently holds about 197,000 BTC. Because the previous sales were completed through over-the-counter transactions, it did not directly affect the price, but the market panic caused may lead to a short-term drop in prices.
HODL15Capital mentioned in its analysis that it has confirmed on the chain that the BTC held by the United States has not been transferred or sold.
CryptoQuant CEO Ki Young Ju wrote on X: "Based on the actual market value, the funds entering the market last year were $379 billion, about $1 billion a day. The $6.5 billion sold by the US government can be absorbed in just one week. Don't panic."
On January 9, regarding the "U.S. Department of Justice was approved to sell the $6.5 billion of seized dark web Silk Road Bitcoin", BitMEX co-founder Arthur Hayes posted on the X platform that Diamond Hand is ready to buy at the bottom.
