The U.S. government is planning to sell approximately $118 million worth of seized Bitcoins from the Silk Road. The decision to dispose of the 2,934 BTC was revealed in a seizure notice circulated on social media on January 24. The move follows the January 8 sentencing of Silk Road Xanax dealer Ryan Farace and his father, Joseph Farace, who is charged with conspiracy to commit money laundering. Some in the community are concerned that the auction could lead to a significant Bitcoin "dump." However, market commentators, including Steven Lubka, managing director of Bitcoin exchange Swan Bitcoin, dismiss this concern, pointing out that the amount to be sold is relatively small compared to recent outflows from the Grayscale Bitcoin Trust (GBTC).
Since converting to a spot Bitcoin exchange-traded fund on January 11, GBTC has sold 106,575 Bitcoins worth $4.2 billion. The U.S. government's plan to sell 2,934 Bitcoins represents just 1.5% of the total 194,188 Bitcoins it has seized in criminal cases, valued at about $7.7 billion, according to crypto firm 21.co. In the context of Bitcoin's circulating supply, this represents less than 1%. The U.S. government has seized Bitcoins in various cases, including the 2016 Bitfinex hack, Silk Road cases, and from Silk Road hacker James Chung. Approximately 41,000 Bitcoins are slated to be sold in four installments throughout 2023.
The U.S. government has a history of auctioning seized Bitcoins, with a notable 2014 auction by venture capitalist Tim Draper, who acquired nearly 30,000 Bitcoins. In recent times, the government has also opted to sell seized cryptocurrencies on exchanges rather than through traditional auctions, with the last known sale involving 9,118 Bitcoins in March 2023.
