U.S. To Sell $6.5 Billion In Silk Road Bitcoin, Missed $17.9B Profit #CriptoNews

The U.S. Department of Justice (DOJ) is set to auction off $6.5 billion worth of Bitcoin seized from the Silk Road, following a December 30 court ruling that resolved a lengthy legal battle over the ownership of these funds.

As of January 9, the U.S. government holds 198,000 BTC, worth $18.5 billion, according to Arkham Intelligence. The Bitcoin to be auctioned is part of this reserve.

Some analysts suggest the Biden administration might offload the Bitcoin before the transition of power to Donald Trump’s presidency. Fox Business contributor Jason Williams claimed the administration seeks to capitalize on the bull market, forcing the Trump administration to repurchase at higher prices.

“This is a blatant perversion of the government’s fiduciary responsibility,” Williams stated.

Bitcoin’s price fell by 2.78% following the court ruling, sparking concerns that a large-scale auction could exert further downward pressure on BTC prices.

Historically, U.S. government Bitcoin auctions had limited lasting effects on market prices. Between March 2023 and now, government-held Bitcoin dropped from 236,000 BTC to 198,000 BTC—a reduction of 38,000 BTC worth $3.54 billion. Despite this sell-off, Bitcoin’s price ju 375%, driven by demand for spot Bitcoin ETFs and optimism tied to Trump’s proposal to include Bitcoin in U.S. strategic reserves.

The government typically transfers forfeited Bitcoin to the U.S. Marshals Service, which conducts public auctions rather than direct sales on exchanges. These auctions mitigate market disruptions compared to exchange-based sell-offs, which could flood the market and cause steep price drops.

The U.S. government already missed out on big gains by liquidating Bitcoin early. Since beginning its BTC seizures, it sold 195,092 BTC for $366.5 million. At current prices, these holdings would be worth $18.25 billion, a missed profit of $17.9 billion.

Despite the scale of the planned auction, some analysts urge calm. Ki Young Ju, CEO of CryptoQuant, noted, “The U.S. government selling $6.5 billion could be absorbed in just a week. Do not panic.”

In October, the U.S. Supreme Court declined to hear a case about the ownership of 69,370 Bitcoin that was seized from the Silk Road dark web marketplace.

Battle Born Investments, a company claiming rights to the seized Bitcoin through a bankruptcy estate, had requested the review.

This follows earlier rulings from a district court in 2022 and an appellate court in 2023, both of which found that Battle Born did not have a valid claim to the Bitcoin seized after Silk Road’s closure in 2013.

The Supreme Court reviews only a small fraction of the cases submitted each year, selecting around 100 to 150 out of over 7,000 requests.

Earlier this year, the U.S. government transferred about $2 billion worth of Silk Road-linked Bitcoin using Coinbase Prime, the cryptocurrency custody service of the Marshals Service.

The U.S. Marshals Service, which is tasked with enforcing federal court orders, has contracted Coinbase for custodial services, paying $32.5 million for these services.