Market Experts Downplay Concerns Over U.S. Government's Planned Sale of Seized Silk Road Bitcoin
Summary:
The U.S. government's planned sale of $118 million in Silk Road Bitcoin isn't a concern, say market experts. This sale is minor compared to recent Grayscale Bitcoin Trust outflows, says Steven Lubka, managing director of Swan Bitcoin. The sale represents only 1.5% of the U.S. government's total alleged Bitcoin holdings from three significant crime-related seizures. Government has shifted towards selling confiscated crypto on exchanges rather than at auctions, most recently selling 9,118 BTC in March 2023.
The upcoming sale of approximately $118 million in confiscated Silk Road Bitcoin by the U.S. government shouldn't be perceived as worrying, as per several market observers. Information regarding the impending sale surfaced on social media on January 24th through a January 10th forfeiture notice. As per the notice, the government is set to liquidate the 2,934 BTC after Ryan Farace, a Silk Road Xanax dealer, and his father, Joseph Farace, were sentenced for conspiracy to launder money on January 8th.
While some individuals expressed apprehension that the auction might result in a large-scale Bitcoin "dump," many, including Steven Lubka, the managing director of Bitcoin exchange Swan Bitcoin, argue that the sale is trivial compared to the recent Grayscale Bitcoin Trust outflows. Lubka's statement underscored that the GBTC has liquidated 106,575 BTC, valued at $4.2 billion since its transformation to a spot Bitcoin exchange-traded fund on January 11th, overshadowing the government's sale.
It's crucial to note that the impending government sale represents only 1.5% of its total alleged 194,188 BTC or $7.7 billion holdings, acquired from three previous criminal case seizures, according to data from crypto enterprise 21.co. These holdings comprise less than 1% of Bitcoin's circulating supply. The three significant Bitcoin seizures by the U.S. government include 94,643 BTC from the 2016 Bitfinex hack, 69,369 BTC from the Silk Road, and 51,326 BTC from Silk Road hacker, James Zhong. Approximately 41,000 BTC was earlier scheduled for sale in 2023.
Historically, the government has been known to auction Bitcoin, with the 2014 purchase of nearly 30,000 BTC by venture capitalist Tim Draper being particularly notable. Recently, however, the government has switched to selling confiscated crypto on exchanges rather than through auctions, with the most recent known sale happening in March 2023 when 9,118 BTC were sold.
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Published At
1/26/2024 9:34:30 AM
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