The U.S. government regularly holds auctions for its stockpile of bitcoin, ethereum, litecoin and other cryptocurrencies it seizes.
Auctions kicked off in a big way with the 2013 takedown of Silk Road, a dark web marketplace that traded in illegal goods.
“It could be 10 boats, 12 cars, and then one of the lots is X number of bitcoin being auctioned,” said Jarod Koopman, director of the Internal Revenue Service’s cybercrime unit
The 500 bitcoin it sold to Riot Blockchain in 2018 for around $5 million? That’s now worth north of $23 million. Or the 30,000 bitcoin that went to billionaire venture capitalist Tim Draper for $19 million in 2014? That would be more than $1.3 billion today.
The government has obtained all that bitcoin by seizing it, alongside the usual assets one would expect from high-profile criminal sting operations. It all gets sold off in a similar fashion.
“It could be 10 boats, 12 cars, and then one of the lots is X number of bitcoin being auctioned,” said Jarod Koopman, director of the Internal Revenue Service’s cybercrime unit.
It could be 10 boats, 12 cars, and then one of the lots is X number of bitcoin being auctioned,” said Jarod Koopman, director of the Internal Revenue Service’s cybercrime unit.
One of the next seizures up on the auction block is $56 million worth of cryptocurrencies that authorities confiscated as part of a Ponzi scheme case involving offshore crypto lending program BitConnect. Unlike other auctions where the proceeds are redistributed to different government agencies, the cash from this crypto sale will be used to reimburse victims of the fraud.
The government’s crypto seizure and sale operation is growing so fast that it just enlisted the help of the private sector to manage the storage and sales of its hoard of tokens.
Seizing and stockpiling bitcoin
For the most part, the U.S. has used legacy crime-fighting tools to deal with tracking and seizing cryptographically built tokens, which were inherently designed to evade law enforcement.
“The government is usually more than a few steps behind the criminals when it comes to innovation and technology,” said Jud Welle, a former federal cybercrime prosecutor.
