The Department of Justice (DOJ) secured approval from a US federal judge to dispose of Bitcoin (BTC) worth $6.5 billion, linked to the Silk Road crackdown. 

In a recent publication, Decrypt, a media platform, disclosed that the Justice Department secured a court greenlight to sell tens of thousands of BTC seized by authorities from Silk Road hackers. The outlet cited an unnamed DOJ official who said Judge Richard Seeborg’s greenlight allows the US government to liquidate the 69,370 BTC. 

Surprisingly, this ruling presents a new twist as the US awaits a new administration whose leadership vowed not to dispose of BTC during the Bitcoin 2024 Conference held in Tennessee. Then, President-elect Donald Trump promised Bitcoiners present in the late July event that the US would not sell its Bitcoin holdings. Instead, he would oversee BTC stockpiling during his tenure as the US president.

This development occurred on December 30, though the public was unaware till the January 9 publication. 

Revisiting Silk Road Bitcoin 

The US government confiscated the 69,370 BTC during a crackdown on the Silk Road operators. The darknet marketplace operators ran the platform in 2011-13, facilitating illegal activities such as the sale of drugs.

The Silk Road actors used Bitcoin to settle payments and keep the operations discreet. A multi-agency investigation of the illegal activities culminated in ‘Individual X’ surrendering 69,370 BTC to the US authorities. 

The latest development signals a significant move to liquidate Bitcoin, citing the price volatility of the pioneer crypto. The move mirrors the July initiative by the German government to offload the BTC. 

Nonetheless, the request by the US government faced hurdles following the lawsuit that Battle Born Investments leveled laying claim to the funds via a bankruptcy estate. 

In October last year, the US Supreme Court declined Battle Born’s appeal to contest ownership of the seized crypto, which led to the recent court ruling.  

The court decision prompted Battle Born’s counsel to allege that the Justice Department uses procedural trickery in the Civil Asset Forfeiture process. However, the DOJ spokesperson reiterated intentions to proceed with the Bitcoin sale per the court’s judgment.

Liquidating the Silk Road Bitcoin is a turning point in the crypto policies that the Trump administration promised. While this could set a precedent for seized crypto, the handling would have political and economic implications after the January 20 inauguration. The eventual sale could reignite the selling pressure witnessed in July when the German government’s sale plunged Bitcoin prices below $49,000.     

The ruling contradicts the objective that Senator Cynthia Lummis eyes via the Bitcoin Act of 2024. The draft proposal mandates that the US Treasury create the Strategic Bitcoin Reserve (SBR) to secure BTC storage. Additionally, the bill presents a case for the Bitcoin Purchase Program, where the Treasury should purchase 1 million BTC in five years and hold for at least two decades.

Despite the recent greenlight, it would take longer to liquidate the BTC since the federal asset forfeiture process features several administrative steps. Also, the ruling by Judge Seeborg is subject to appeal windows. 

Global Reaction to Ruling on Silk Road BTC

The US move to liquidate the Bitcoin stash would negatively affect the premier crypto prices. While portions of the BTC holdings have been sold, the ruling presents opportunities for investors to buy Bitcoin at discounted prices. 

El Salvador President Nayib Bukele acknowledges that selling Bitcoin would create selling pressure capable of crashing its prices. This could replicate the price slump when the German government dumped 50,000 BTC seized from Movie2k.to, a platform orchestrating money laundering. 

The charts show that recent developments have heavily pressured the digital assets market, with most tokens surrendering their New Year’s gains. Bitcoin is not exempt from this bloodbath; it slid from $95,000 to hover around $92,000.

Nevertheless, CoinGecko data shows that the premier crypto has regained its uptrend momentum, with a 1.4% intraday gain, surpassing the $94,500 mark at press time.