Key Insights:

• Trump pledges to keep all US-held Bitcoin, stirring debate on the fate of seized Bitfinex assets and ongoing investigations.
• The US holds $14.4B in Bitcoin, with a significant portion from Bitfinex and Silk Road seizures, sparking legal and policy discussions.
• Trump promises Ulbricht’s commutation, but the seized Silk Road Bitcoin remains government property due to a 2022 restitution deal.

During a speech at the Bitcoin 2024 conference in Nashville, Tennessee, on July 27, former President Donald Trump declared his intention to make the United States a global leader in cryptocurrency. Among his promises, Trump emphasized that, if re-elected, his administration would retain 100% of the Bitcoin currently held by the US government.

Trump stated, “For too long, our government has violated a cardinal rule that every Bitcoiner knows by heart: never sell your bitcoin. If I am elected, it will be the policy of my administration for the United States of America to keep 100% of all the bitcoin the US government currently holds or acquires.” This commitment has sparked discussions among cryptocurrency advocates regarding the fate of specific seized assets.

Bitfinex Seized Assets

The US government reportedly holds 212,847 Bitcoin, valued at approximately $14.4 billion as of July 28, 2024. A significant portion of this sum originates from the Bitfinex cryptocurrency exchange. In 2022, the US seized approximately 94,636 BTC from wallets associated with hackers who admitted responsibility for stealing 119,754 BTC from Bitfinex in 2016. Excluding these coins, the government would be left with about $8 billion worth of Bitcoin.

Despite the large seizure, the investigation into the Bitfinex hack is still ongoing. The US Justice Department has transferred assets related to the hack between wallets as recently as February 2024. 

However, it remains unclear what the final disposition of these funds will be. Legal precedence surrounding such asset forfeitures is sparse, raising numerous questions about future actions.

Jameson Lopp, Casa co-founder and CTO, pointed out the potential issue, stating, “There is a slight problem no one is acknowledging regarding the plan.” This highlights the uncertainty surrounding the return of these funds to their original owners or their continued retention by the government.

There's a slight problem no one is acknowledging regarding the plan for the US Federal Government to HODL all 200,000 BTC in its possession:

95,000 BTC from that stash rightfully belongs to @bitfinex.

— Jameson Lopp (@lopp) July 27, 2024

US Asset Forfeiture Laws

Federal laws on asset forfeiture typically do not prioritize returning funds to victims, particularly when investigations are still ongoing. If the Bitfinex assets are linked to other alleged crimes, the Justice Department would need to complete its investigations and prosecutions before deciding on the fate of the funds.

Moreover, legal constraints may prevent US agents from returning aggregated stolen funds to a single-source distributor. A judge could potentially order the return of funds to affected users under the supervision of a neutral third party. The ongoing investigation means that the exact legal route for these funds remains undetermined.

Trump’s policy proposal to hold all government-held Bitcoin may merely imply avoiding the sale of Bitcoin for fiat currency rather than defying any court orders related to these assets. The distinction between a policy and a legislative or executive order leaves room for flexibility in the administration’s approach.

Silk Road Funds and Ulbricht’s Case

In 2020, the US government seized 50,591 BTC, valued at approximately $3.4 billion as of July 28, 2024, in connection to Ross Ulbricht and the Silk Road. Ulbricht, convicted in 2015 for narcotics trafficking, hacking, and money laundering, is currently serving a double life sentence plus 40 years.

Trump also promised to commute Ulbricht’s sentence if re-elected, though the commutation would not overturn the conviction. This means that the seized funds, deemed criminal proceeds, would remain with the US government.

In contrast, presidential candidate Robert F. Kennedy Jr. has stated he would pardon Ulbricht on his first day in office, which could theoretically open a path for Ulbricht to reclaim the seized Bitcoin. However, Ulbricht signed away his claim to these funds in 2022 as part of a deal to repay his $183 million restitution debt, effectively removing any legal claim he might have had.

Future of US Government-Held Bitcoin

The future of the US government’s Bitcoin holdings remains uncertain. While Trump’s policy indicates a refusal to sell, legal proceedings and ongoing investigations may necessitate different outcomes for specific assets like those from Bitfinex and Silk Road.

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