Wednesday, January 26

What is the United States government doing with its secret reserve of Bitcoin?


According to a report From CNBC, the United States government has a huge secret reserve of Bitcoin and other cryptocurrencies that it seizes.

Therefore, the United States government’s cryptocurrency seizure and sale operation is growing rapidly. And, it has enlisted the help of the private sector to manage the storage and sale of its set of tokens.

In particular, the United States has used crime fighting tools. To deal with the tracking and seizure of tokens, which were inherently designed to evade law enforcement.

In this regard, Jud Welle, former federal cybercrime prosecutor, said: “The United States government is often more than one step behind criminals when it comes to innovation and technology».

In recent years, the US government has recovered record amounts of cryptocurrencies. According to the statements of Jarod Koopman, director of the cybercrime unit of the Internal Revenue Service to CNBC:

  • In 2019, around $ 700,000 was seized.
  • In 2020, it was up to $ 137 million.
  • Until September 2021, they totaled $ 1.2 billion.

Links in the Bitcoin flow

Currently, there are three junctures in the flow of Bitcoin and other cryptocurrencies, through the criminal justice system in the United States:

  1. Search and seizure.
  2. The liquidation of seized cryptocurrencies.
  3. The deployment of the product of those sales.

In fact, Jarod Koopman stated: ‘Afterwards, we all meet when it comes time to carry out any kind of police action. Be it an arrest, a seizure or a search warrant. And that can be nationally or globally.».

According to CNBC, during this seizure, multiple agents intervene to ensure adequate supervision. Also including the managers, who establish the necessary wallets to secure the seized crypto.

Auctions

In the same way, the United States government regularly conducts auctions for its holdings of Bitcoin, Ethereum, Litecoin and other cryptocurrencies that it seizes.

By the way, the auctions started with the decommissioning of Silk Road in 2013. Jarod Koopman said: «It could be 10 boats, 12 cars, and then one of the lots is X amount of Bitcoin to be auctioned».

It should be noted that, in November 2020, the government confiscated $ 1 Billion in Bitcoins Linked to Silk Road. But, because the case is still pending, those Bitcoins are idle in a Wallet.

So once a case is closed, the U.S. Marshals Service is the primary agency responsible for auctioning the government’s cryptocurrency holdings. To date, it has seized and auctioned more than 185,000 Bitcoins.

What is the United States government doing with its secret reserve of Bitcoin?

Indeed, the proceeds from these auctions are normally deposited in the Treasury Forfeiture Fund or the Department of Justice Asset Forfeiture Fund, which are used to finance future research.

Incidentally, one of the upcoming seizures on the auction block is $ 56 million in cryptocurrencies that authorities seized as part of a Ponzi scheme case. That involves the BitConnect offshore cryptocurrency loan program. Very importantly, the cash from this crypto sale will be used to reimburse the victims of the fraud.

Finally, the head of criminal investigation of the Internal Revenue Service (IRS) indicated: «I expect the trend of crypto seizures to continue as we move into fiscal year 22. We see cryptocurrencies involved in various crimes as we move forward».

I close with this phrase by Alfred Tennyson: “Dreams are true while they last. And don’t we live in dreams?»



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