69,000 Bitcoins for sale? What impact will the Silk Road coin sale have on the market?

Author: shushu, BlockBeats

Just ten days after the U.S. government recommitted $6 billion worth of military and security assistance to Ukraine, the U.S. Department of Justice is preparing to launch a liquidation of a huge Bitcoin asset.

On January 9, an official confirmed to DB News that the Department of Justice had been granted permission to dispose of 69,370 Bitcoins seized in connection with the famous Silk Road case. The asset's current market value is approximately $6.5 billion.

It is reported that the Department of Justice requested permission to sell these assets, citing fluctuations in the price of Bitcoin. When asked about next steps, a spokesperson for the Ministry of Justice said: "The government will take next steps based on the judgment in this case."

After the news broke, Bitcoin fell by more than 2.5% in 24 hours. As of writing, the price was US$94,400.

One of the most influential development milestones in Bitcoin history:

The Silk Road

In October 2013, a young man named Ross Ulbricht was arrested in a San Francisco library. He used the pseudonym "Dread Pirate Roberts" (DPR), which caused a stir. The drug and weapons trading website "Silk Road" was declared dead. Ross Ulbricht was sentenced to life in prison in 2015.

This darknet, which was born in 2011, initially provided a trading platform for various illegal goods and services, such as drugs, fake documents, hacking tools, etc. in an "eBay-like model". Due to the anonymity of the dark web and Bitcoin as the main payment tool, Silk Road once developed rapidly and was regarded as one of the most famous and largest illegal markets in the dark web.

From 2012 to 2013, law enforcement agencies such as the FBI and Drug Enforcement Administration began to pay close attention to the Silk Road and secretly deployed undercover personnel. Due to the platform's frequent transactions, large scale, and involvement in illegal activities in multiple countries, U.S. law enforcement agencies have listed it as a key target for crackdowns.

When the FBI investigated the Silk Road case, it seized a total of approximately 170,000 Bitcoins from the platform's servers and Ross Ulbricht's personal digital wallet. This was one of the largest Bitcoin law enforcement seizures in history at the time.

When law enforcement officers arrested Ross Ulbricht, they obtained access to the relevant encrypted wallets through the laptop and server information seized at the scene. Since Bitcoin transactions require private keys to be transferred, once law enforcement agencies obtain a valid private key, they can transfer the corresponding Bitcoins from the suspect's address to an official "escrow" wallet.

This is not the first time the US government has sold Bitcoin

Since 2014, the U.S. government has auctioned Bitcoins seized from the "Silk Road" case several times. The timing and impact on market prices are worth reviewing.

In June 2014, the U.S. government held its first public auction of Bitcoins seized from Silk Road. The US Marshals Service auctioned approximately 30,000 Bitcoins. Bidders include many investment institutions and individuals, and well-known investor Tim Draper has won the bid many times. In subsequent auctions, the government sold the remaining Bitcoins in multiple batches.

After the auction was completed, the price of Bitcoin did not appear an "avalanche" around $600, but remained stable. Since the auction process showed institutional investors actively bidding, the "legitimization" attribute of Bitcoin has also been strengthened to a certain extent.

The second round of auction in December 2014 held 50,000 Bitcoins, nearly twice the size of the first auction, and market expectations were also pessimistic. However, after the auction dust settled, Bitcoin still fluctuated in the range of 300 to 400 US dollars, and did not suffer a continuous plummet.

In March 2015, 50,000 Bitcoins were auctioned again. At this time, Bitcoin had recovered from its previous trough. The previous panic in the market further weakened, and the price quickly stabilized after fluctuating slightly between $280 and $300.

In November 2015, the U.S. government’s cumulative auction of hundreds of thousands of Bitcoins at the end of the year did not ultimately cause major market turmoil. Instead, as buyers continue to compete for bids, these auctions are interpreted as a symbol of Bitcoin gradually gaining more status as a "legitimate investment."

As of today, the U.S. Department of Justice has been allowed to liquidate the remaining 69,370 BTC (worth approximately US$6.5 billion) seized in the Silk Road case. The wallet address "bc1qa5" labeled as Silk Road has been silent for more than 4 years.

Judging from past sales history, the price of Bitcoin may experience a short-term price panic. However, in the long term, because the US government has mostly adopted OTC auctions in the past, it may not sell at market prices, which will have a negative impact on the price of Bitcoin. Won 't last long.

Trump’s pardon and Bitcoin reserve promise may be on hold?

In May 2024, during his presidential campaign, Trump promised at the Libertarian Party National Convention in Washington, D.C., that if he was re-elected as president, he would commute the sentence of Ross Ulbricht, the founder of the "Silk Road", on the first day. On July 28, when Trump spoke at the Bitcoin 2024 Conference, he once again promised to commute the sentence of Silk Road founder Ross Ulbricht after being elected president.

On November 14, Ross William Ulbricht posted on the X platform for the first time after the US election, saying, "I would like to express my sincere gratitude to everyone who voted for President Trump. I believe he will fulfill his promise and give me a second chance. After more than 11 years in the dark, I finally see the light of freedom at the end of the tunnel. Thank you very much.

So far, the bet on PolyMarket on "Will the U.S. government sell Bitcoin before Trump takes office?" has become a popular bet, with a betting volume of $136,310, and the probability of selling Bitcoin before Trump takes office is 22%. .

Given that Trump has previously promised to commute the sentence of Ross, the founder of "Silk Road", and has repeatedly reiterated that he will build the United States into the world's cryptocurrency capital, he will embrace cryptocurrency.

Therefore, most people believe that Ross may have his sentence commuted or even be pardoned. We can also see that in the PolyMarket betting topic on "Who will Trump pardon within 100 days of taking office?", Ross is very likely to be pardoned. As of now, Ross is very likely to be pardoned. The probability of being pardoned is 73%.

Due to Trump 's Bitcoin reserve commitment, if the US government does not sell before Trump officially takes office on January 20, the market speculates that the Bitcoin paid in the Silk Road case will not be sold.

How much Bitcoin does the U.S. government still have?

According to Bitcion Treasures data, the number of Bitcoins held by the U.S. government is 207,189, accounting for 0.987%. At current Bitcoin prices, the total value of Bitcoin held by the U.S. government is $19,544,018,200.