The U.S. Department of Justice has been cleared to sell approximately 69,370 Bitcoin seized from Silk Road. This marks one of the largest cryptocurrency seizures in history.
Legal Battles Over Bitcoin
The Bitcoin sale faced pressure in subsequent years. Battle Born Investments, claiming ownership over the cryptocurrency, attempted to halt the sale and demanded transparency regarding 'Individual X.' These allegations were dismissed by the court, and U.S. District Judge Richard Seeborg granted the DOJ's motion to sell the Bitcoin. The court concluded that the DOJ's action was legal and that individual interests outweigh public interests. Reportedly, some of the Bitcoin has already been liquidated, though unconfirmed. In December 2024, two billion dollars' worth of Bitcoin were moved to Coinbase pursuant to a deal with the U.S. Marshals Service.
How the Sale Could Affect Markets
This is not the first time the US government has confiscated Bitcoin. Since 2014, the DOJ has sold a large amount of cryptocurrency, including 30,000 Bitcoin bought by investor Tim Draper. Past sales have created short-term market disturbances but haven't led to lasting changes. The planned sale follows the DOJ's structured liquidation model where Bitcoins are sold via sealed bids to institutional investors to minimize market disruption. Previously, Bitcoin prices tended to recover shortly after initial declines. Institutional investors perceive government auctions as a form of endorsement, generating increased market interest. However, due to the significantly higher volume in this sale, market responses may vary.
Bitcoin Price Reaction
The DOJ's announcement to sell Bitcoin affected its price. At press time, Bitcoin dropped to $93,800 before recovering to $94,300. Further sales could lead to a decrease in Bitcoin prices, depending on how they are sold. Arkham Intelligence reported that the wallet holding Silk Road Bitcoin saw its balance drop to zero on January 8, raising questions about the start of the liquidation process.
As the market responds to the DOJ selling Bitcoin, El Salvador President Nayib Bukele sees a buying opportunity. The country, which recently adopted Bitcoin as legal tender, continues to purchase during price dips.
