While most government assets gather dust in storage facilities, the US Marshals Service has been quietly offloading a fortune in digital currency. Between 2014 and 2020, they auctioned approximately 185,000 Bitcoin seized from criminal enterprises—primarily the infamous Silk Road marketplace. Back then, nobody raised an eyebrow. Just another government sale.
What a mistake that turned out to be.
In 2014, venture capitalist Tim Draper made headlines when he purchased 29,656 Bitcoin for $18 million—roughly $600 per coin. A bargain by today’s standards. But that was just the beginning. Throughout 2015, the government conducted four additional auctions, selling a whopping 144,336 Bitcoin at prices between $200 and $600 each. Do the math. It’s painful.
The auctions continued with diminishing volumes. August 2016 saw 2,700 BTC sold. Another 3,813 Bitcoin in January 2018. By February 2020, they offloaded 4,041 more. Each auction followed standard procedure: register, deposit funds, submit sealed bids. Simple process, catastrophic timing.
These weren’t small potatoes. Approximately 50,000 of those coins sold for around $270 each. Today? Those same coins would fetch $4.4 billion. Billion with a B.
Critics have slammed the government’s strategy. Instead of holding this appreciating asset, they converted it to dollars following standard forfeiture protocols. The sales initially triggered market volatility but ultimately demonstrated Bitcoin’s liquidity. Silver lining, I guess.
The auctions created opportunities for major investors to accumulate significant holdings while establishing precedent for how governments handle digital assets. But the financial opportunity cost is staggering. The government’s failure to recognize Bitcoin’s fixed supply limit has cost taxpayers billions in potential value. Recent data shows the US government still holds over US$18 billion worth of seized cryptocurrencies, suggesting they might have learned from past mistakes.
The debate continues. Should governments hold seized cryptocurrency as an investment? Or dump it immediately? Hard to argue with hindsight. Those Bitcoin would’ve funded a lot of government programs today. Now, with the Department of Justice recently approving the sale of 6.5 billion worth of Bitcoin seized from Silk Road, history seems poised to repeat itself.
The irony isn’t lost on crypto enthusiasts. The government seized digital currency from people who believed in its future value—then sold it for pennies on today’s dollar. Sometimes the criminals make better investment decisions than the feds. Imagine that.
