By George Ward
Court Okays Asset Seizure
The United States District Court for the Ninth Circuit has officially confiscated 69,370 Bitcoin (BTC) and other cryptocurrencies from the bankrupt dark web store Silk Road. According to a recent court filing, the appeal court has upheld the transfer of Bitcoin to federal custody.
This move follows a previous verdict in which the government asserted its claim to the digital assets involved with Silk Road’s illegal operations. In addition to BTC, the confiscated Bitcoin-related assets included Bitcoin gold (BTG), Bitcoin SV (BSV), and Bitcoin Cash (BCH).
Essentially, the court has approved that these cryptocurrencies obtained from Silk Road should now be under the control of federal authorities. This legal action is the completion of a process aimed at redirecting these digital assets from their past illegal use to authorized state oversight.
The Beginning Of The Case
Back in August, a major judgment involving Silk Road’s Bitcoin was released. The court’s decision stemmed from the US Justice Department’s 2020 seizure motion requesting the official confiscation of this cryptocurrency. At the time, the value of Bitcoin had surpassed $1 billion.
The movement of 69,369 Bitcoins from a wallet address triggered this legal action, representing a substantial transaction after these assets had been inactive since 2015. The wallet’s connection to the Silk Road drew the regulator’s attention.
Silk Road is a network infamous for enabling illegal drug trades and other unlawful transactions. According to the court document, the respondent in this lawsuit is Silk Road founder Ross Ulbricht.
The renowned site was shut down by the Federal Bureau of Investigation (FBI) following Ulbricht’s arrest in late 2013. Two years after his arrest, Ulbricht was sentenced to double life imprisonment plus an additional 40 years in prison, all without the possibility of parole.
This BTC seizure was the greatest by any regulator globally. Meanwhile, the US government intends to liquidate more than 41,000 Bitcoin seized as part of the Silk Road inventor Ross Ulbricht’s indictment. According to court filings filed on March 31, the government sold 9,861 BTC for $215.7 million on March 14, 2023.
US Government Bitcoin Holdings
The United States government has become a major Bitcoin holder as a result of seizures from criminal individuals and entities. Over the past three years alone, it has amassed over 215K BTC.
More importantly, these confiscated possessions are securely maintained in offline, encrypted hardware wallets that are meticulously controlled by several federal institutions, including the Department of Justice (DoJ) and the Internal Revenue Service (IRS).
Despite possessing considerable Bitcoin reserves, the government remains hands-off when it comes to active trading or attempting to profit from market volatility. The complicated legal procedures involved in this case mean that the actual process of disposing of these assets could take several years.
Nevertheless, the government retains control of the seized BTC throughout this judicial process, using it as evidence or as proceeds from criminal actions. According to on-chain data, the value of the government’s BTC holdings has risen to $8 billion.