The US Department of Justice (DoJ) has been given the green light to sell 69,370 bitcoin seized from the infamous Silk Road darknet marketplace, a stash worth around $6.5 billion. This ends a long legal battle and has bitcoin investors worried.
The bitcoin was seized during the takedown of Silk Road, an online black market, shut down by the feds in 2013. The bitcoin is tied to “Individual X”, a mysterious person who allegedly hacked Silk Road and then turned the bitcoin over to the authorities in 2020.
Related: Jimmy Zhong’s Billion Dollar Popcorn Can And The Silk Road Heist
So the efforts by claimants, including Battle Born Investments, to delay the sale and find out who Individual X was, has now failed.
Judge Richard Seeborg ruled in favor of the DoJ, denying the motion to stay the sale. In his order he denied the claimants’ arguments and allowed the government to sell the assets.
The DoJ argued that the bitcoin needs to be sold now because of market volatility and that if the sale was delayed the value would be lost. A DoJ spokesperson said “The government will proceed further consistent with the judgment in this case.”
This isn’t the first time the government has sold seized bitcoin but it’s one of the largest in history.
The news has spooked bitcoin traders who fear it will cause big price movements. On Wednesday, bitcoin dropped from $95,000 to an intraday low of $92,938 before stabilizing at around $94,500.
Ryan Lee, chief analyst at Bitget Research expressed concern about the recent development, saying, “Large-scale bitcoin sales like this often trigger market fluctuations. If the government sells the bitcoin all at once, market sentiment could shift dramatically.”
Despite the concerns, some think the market can handle it. CryptoQuant CEO Ki Young Ju said last year the market absorbed $1 billion daily and, “The U.S. government selling $6.5 billion could be absorbed in just a week. Do not panic.”
The ruling comes just two weeks before the inauguration of President-elect Donald Trump who has a very different view on government held bitcoin. During his campaign, Trump said he would stop selling seized bitcoin and instead create a strategic reserve to get higher returns in the future.
The sale under the outgoing administration has raised eyebrows with some thinking it was rushed to avoid conflicting with Trump’s policies.
In the past, the government has sold seized bitcoin in phases to avoid market disruption. This will likely happen with this sale too.
According to Arkham Intelligence, the wallet holding the seized bitcoin related to “Individual X” shows no recent activity for now, maintaining its balance for the past 4 years.
