US govt’s cryptocurrency auctions: All you need to know

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 US govt’s cryptocurrency auctions: All you need to know
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Highlights

  • The US government has been auctioning Bitcoin and other digital currencies.
  • In 2018, it sold 500 bitcoins (BTC) to Riot Blockchain for US$5 million.
  • The next lot for auction is worth US$56 million.

 The US government has been auctioning Bitcoin and other cryptocurrencies seized from illegal coin miners from time to time. These assets are confiscated from criminals in sting operations.

The government closely monitors the cryptocurrency trade using various anti-crime tools. Over the years, it has auctioned illegal cryptocurrencies worth millions of dollars.

For instance, in 2018, it sold 500 bitcoins to Riot Blockchain for US$5 million. They are now worth US$23 million. In addition, in 2014, it sold 30,000 bitcoins to billionaire venture capitalist Tim Draper for about US$19 million. Today, they are valued at around US$1.3 billion.

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The next lot for auction is worth US$56 million. The seized cryptocurrencies were part of a Ponzi scheme involving the crypto lending platform BitConnect. The proceeds from the auction would go to the fraud victims and some government agencies.

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Drive against illegal miners

Former federal cybercrime prosecutor Jud Welle said the government is still a "few steps behind" the criminals in the "innovation and technology" field. Welle added that the government would soon have advanced tools to detect frauds in the market and confiscate illegally acquired crypto assets. He said it might take at least five years to reach that level. 

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Currently, a three-pronged strategy is used In the US criminal justice process to detect and arrest criminals: first, search and confiscate; second, liquidation of the seized assets; and third, distribute the proceeds to fraud victims. 

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Bottomline

According to people familiar with the government probe, authorities seized US$700,000 worth of cryptos in 2019, around US$137 million in 2020, and US$1.2 billion till August 2021. Once the investigation in a particular case is closed, the US Marshals Service is entrusted with auctioning the seized assets. To date, the agency has auctioned over 180,000 bitcoins, currently valued at around US$8.6 billion.

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