Why the US Government Has $5 Billion in Bitcoin (wsj.com) 34
The U.S. government is one of the world's biggest holders of bitcoin, but unlike other crypto whales, it doesn't care if the digital currency goes up or down in value. From a report: That is because Uncle Sam's stash of some 200,000 bitcoin was seized from cybercriminals and darknet markets. It is primarily offline in encrypted, password-protected storage devices known as hardware wallets that are controlled by the Justice Department, the Internal Revenue Service or another agency. What the federal government does with its bitcoin has long been a topic of interest among crypto traders because any sale could potentially swing prices or cause other ripple effects in the $1 trillion digital-asset market.
The U.S. has been notoriously slow to convert its stash of bitcoin into dollars. It isn't HODLing, crypto parlance for "holding on for dear life" and never intending to sell. Nor is it waiting for bitcoin to go "to the moon" so it can sell its holdings for a hefty profit. Rather, that big pile of bitcoin is more a byproduct of a lengthy legal process than strategic planning. "We don't play the market. We basically are set by the timing in our process," said Jarod Koopman, executive director of the IRS's cyber and forensics services section, which oversees all activities focused on cybercrimes.
The U.S. has been notoriously slow to convert its stash of bitcoin into dollars. It isn't HODLing, crypto parlance for "holding on for dear life" and never intending to sell. Nor is it waiting for bitcoin to go "to the moon" so it can sell its holdings for a hefty profit. Rather, that big pile of bitcoin is more a byproduct of a lengthy legal process than strategic planning. "We don't play the market. We basically are set by the timing in our process," said Jarod Koopman, executive director of the IRS's cyber and forensics services section, which oversees all activities focused on cybercrimes.
First crypto story that's not about a scam? (Score:5, Insightful)
Could it be?
I mean, ok, it's about shitcoins seized by sting operations, so some illegal activity is involved, but nobody is trying to scam anything out of anything for a change.
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It takes more than 1 Marine to beat up Chuck Schumer?
Semper faggots
It's not a single entity (Score:5, Insightful)
Part of the reason the US doesn't have a strategy for its bitcoin is because it isn't acting like a single entity. Instead, each agency that has bitcoin has them for specific reasons and will decide what to do with them based on those reasons. Maybe the IRS will decide to sell its bitcoin strategically in an attempt to maximize the money the federal government gets for them, while the Secret Service will return bitcoin to the people they were stolen from, and DOJ will liquidate bitcoin as each individual case involving them concludes. Meanwhile, CIA will distribute bitcoin to its assets to fund ongoing operations, but will be careful to buy them on the open market rather than get them from other parts of the US government to maintain secrecy. That's what happens when things just kind of happen rather than being the result of some overriding strategy.
They have to be careful about liquidating (Score:3)
They have to be careful for political and economic reasons about selling it off because the level of liquidity in the BTC market is not high enough to support a massive increase of say 5k-10k coins at the CEXs. The last thing they want to do is simultaneously cripple their assets' value and have a furious response from pro-crypto politicians in Congress because that's just a lose-lose for the IRS, DHS, FBI, etc.
Basically, they're in the same position as a large institutional stock holder who suddenly wants to sell off their holdings but doesn't have an institutional buyer ready to do a private sale. When a stock with a smallish float has that happen, all hell would break loose on the stock price. That's one of the reasons why we have "dark pools" in the stock market. They were allowed by the SEC (and badly abused by market makers) to rapidly facilitate on and off ramping to control volatility during massive swings in volume.
The real problem is wash trading (Score:5, Interesting)
If $5b in coin got dumped it would expose the wash traders and risk the entire shaky scheme collapsing. The only thing keeping it going right now is inertia, money laundering and the possibility that the SEC will allow EFTs and a 2008 style derivatives market.
That last one terrifies me.
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You wouldn't sell $5 billion worth of bitcoin on a CEX, you would sell it via an OTC desk, the trades wouldn't go through the public order book, and thus the impact on the market price would be minimal. You probably wouldn't sell $5 billion in one go even so.
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and thus the impact on the market price would be minimal.
Unless they're essentially giving it away(because nobody has that much cash to buy crypto instantly) to a party that is going to sit on it like the government is, I can't see how the market price wouldn't be seriously affected.
Because basically every party looking to buy crypto can look at the government and get it for some (probably small) fraction of the price they could buy it from anybody else.
Then just with the news of the price drop you'd have people panicking about their investment(no different than
No they don't. (Score:3)
U.S. Marshals Service doesn't answer to politicians nor crypto bros whether they are holding auctions for confiscated gold, nightclubs or Bernie Madoff's wine [cnbc.com] or for "intangible assets such as virtual currency, domain names, and other various licenses". [usmarshals.gov]
Following their previous modus operandi it will all be sold in large chunks, below current market prices.
USMS "processes more than 30,000 payments, typically exceeding $500 million", annually.
And should the scam coin market fail to handle a sale of mere $5.6
Re:No they don't. (Score:5, Insightful)
Agreed. If everything was dumped at once that would be roughly 0.005% of the entire market value. If a market can't handle that insignificant amount, it's not a real market.
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The USMS is part of the DOJ, meaning that they answer to the Attorney General, a politician.
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They have to be careful for political and economic reasons about selling it off because the level of liquidity in the BTC market is not high enough to support a massive increase of say 5k-10k coins at the CEXs. The last thing they want to do is simultaneously cripple their assets' value and have a furious response from pro-crypto politicians in Congress because that's just a lose-lose for the IRS, DHS, FBI, etc.
They really don't care about any of that. At all.
If they did care, though, they could do BTC a service by stabilizing it, at least from above... pick a price target and whenever the price climbs above that level they could begin selling until it drops below that target. Given that the whole cryptocurrency market is a huge mass of scams, I'm sure seizures will always stay ahead of selloffs so they could do this in perpetuity.
Why do you think that (Score:1)
The last thing they want to do is simultaneously cripple their assets' value and have a furious response from pro-crypto politicians in Congress
Are you sure that is "the last thing" they want to do?
Look at how the government feels about Bitcoin generally, and most pro-crypto politicians specifically, and then tell us with a straight face that is the "last thing they want to do" instead of being very high on the list.
I am not in Crypto currently and this giant overhang of sales we know are inevitable is just
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They have to be careful for political and economic reasons about selling it off because the level of liquidity in the BTC market is not high enough to support a massive increase of say 5k-10k coins at the CEXs.
I wouldn't worry about it. Given the US Federal government would prefer crypto just went a way, I expect they see it as a win that they're taken 200,000 out of circulation. At current prices, $28,000/coin, the stash is worth about $5 billion. It's not even a rounding error in the federal balance sheet.
Someone will eventually find all these hardware wallets, dead and inoperable, in the crate next to the Ark of the Covenant.
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Elsewhere, somebody suggested setting a price, and just selling to anybody willing to meet that price. While more effort, this would presumably get you more money for the goods than all at once in an auction(or even several).
On the other hand, I can't think of a better way to actually kill crypto.
Because until the Feds run out while doing that, it just set a price ceiling for the crypto in question. It can't really go higher because otherwise you just buy from the feds.
That makes it worse as an investment
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Apply them to the debt (Score:3)
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This.
BTC reserves would make a great slush fund they could use to buy arms for the cartels, destabilize Nicaragua, etc.
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Would? Are you aware of the 2020 election meddling/funding scam through FTX?
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No. That topic has not been approved by the mainstream media Bureau of Propaganda. Next thing, you'll probably start posting about having dirt on Hillar-
They should crash the market (Score:2)
Unlock all the devices over time and consolidate all the wallets. Then in one night sell off BTC for pennies on the dollar. Send the market crashing. Teach BTC a lesson for competing with the USD.
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Holding it indefinitely makes the crypto bros richer. Give the BTC away to the poor and watch them buy TVs and phones and healthcare at the expense of a handful of rich crypto speculators. Even if it doesn't alter their personal wealth, watching poor people benefit will at least stick in their craw. Those guys hate that.
But more seriously, I wasn't being serious. I posed a ridiculous hypothesis for the lulz.
P.S. how did you know I was a sparky? I haven't worked in that industry for 25 years.
$5B? (Score:3)
So, couch change?
because... (Score:2)
They stole it all ?
Money (Score:1)
how to recover lost bitcoin (Score:1)