On November 3rd, someone named 'Individual X' (their identity is known to the US government) signed an agreement consenting to the forfeiture of 69,370 BTC they stole from Silk Road. Those funds were sent to a US government controlled Bitcoin wallet.
The screenshots below highlight the transfer noted in the court documents.
Worth nearly $1 billion, that transaction piqued my interest, so I started collecting Bitcoin seizure notices from the US Department of Justice website. After almost three months of data collection, I can't help but notice a strange pattern that has emerged.
It seems like the US government is going out of their way to downplay the fact that they are accumulating a Bitcoin balance.
For years, companies and politicians have used the 'Friday night news dump' tactic to send out bad news in hopes of avoiding scrutiny. The idea is that by sharing bad news late on Friday evening when everyone has left the office for the weekend, the bad news will either not be seen, or be forgotten by Monday morning.
I'm skeptical that the strategy actually works in practice, but that's exactly what the US government seems to be doing with their latest Bitcoin forfeiture announcements.
Let me explain.
When news of the November 3rd Bitcoin forfeiture announcement broke, I was immediately puzzled as to why a transfer of 69,370 BTC was happening in 2020, years after Silk Road was shut down.
However, the entire Silk Road era happened before I even knew what Bitcoin was, and since the court filings associated with the transfer didn't contain many clues, I figured there was probably a good reason I wasn't aware of, and I moved on.
My interests then shifted to tracking the flow of forfeited Bitcoin, and trying to figure out how frequently US government agencies were actually seizing the asset, and how valuable their seizures were.
Every day, I searched the Department of Justice website for new Bitcoin-related notices. In November, I found 11 notices related to 7 forfeitures, amounting to a total of 41.2232813 BTC.
In December, it was mostly the same story. There were only 12 notices related to 4 forfeitures, amounting to a total of 11.0364055 BTC in the first 21 days of the month.
For the next 9 days over the holidays, no more notices were published, but on New Years Eve I came across a new filing. It was a notice announcing the forfeiture of 391.5873617 BTC, valued at roughly $12M.
I found a couple of things strange about this notice.
First, the timing was odd.
The filing was posted almost two years after the assets were seized, and on New Years Eve of all days.
On its own, the two year delay isn't weird. I expect to see some bureaucratic processing delays associated with any government filings, but the notice was published on New Years Eve.
Why would a government employee would be filing a two-year-old asset forfeiture notice on a federal holiday?
Second, the amount was far larger than other recent filings.
391 BTC was the biggest notice I had seen since the Nov 3 announcement, and was interesting enough for me to tweet about it.
While it was still only worth $12M on New Years Eve, it was worth at least 20x more than all other notices since the November 3rd announcement.
Therefore, the filing seemed too strange to be a coincidence.
I continued tracking asset forfeitures in January, where another 5 forfeiture notices were published in the first 19 days, amounting to a total of 31.1742004 BTC.
Peanuts once again.
Then, on January 20th, 2021, another big asset forfeiture notice was published.
It was for 279.543012 BTC seized on November 22, 2016 and forfeited on July 2, 2019, worth 20x more than the next largest January notice.
A Wednesday announcement of a $10M Bitcoin seizure made no headlines among Bitcoin media outlets, but yesterday was not just any Wednesday. It was Inauguration Day.
Combined, all three big asset seizures form an interesting pattern.
Those three transactions represent 70,041 BTC (0.33% of all Bitcoin supply), and almost as much as the 70,470 BTC MicroStrategy bought in 2020.
They are also the only 3 seizures worth more than 20 BTC among all 19 asset seizure events since November began.
Call me crazy, but it looks like the Department of Justice is pulling a classic 'Friday night news dump' for their large Bitcoin forfeitures.
The next question to ask is why?
A Bitcoin bull might say the DoJ is trying to limit media attention to quietly build a position.
However, this would go against all past precedents the US government has set. When they seized 174,000 BTC from Silk Road in 2013, they sold all their holdings in four separate public auctions. Another 7,850 Bitcoin that was seized in various cases since then was auctioned off in 2018 and early 2020.
History would suggest that the US government will not hold their seized Bitcoin this time around, but maybe Bitcoin's recent acceptance as a form of 'digital gold' could change their minds.
A Bitcoin bear might say the DoJ wants to limit media attention so they can sell their forfeited assets discreetly.
However, this would also go against all past precedents the US government has set. All prior Bitcoin seizures have been sold via the US Marshals Service. They host regular public auctions for all seized assets, including homes, boats, and other items.
History would suggest that the US government will not sell their seized Bitcoin in private, but market infrastructure and asset liquidity has improved enough to support these kinds of large, private liquidations.
A Bitcoin skeptic might say the DoJ wants to limit media attention just to avoid giving Bitcoin any more attention.
Every time Bitcoin makes front-page news, the Bitcoin community grows stronger. Every attempt to slander the community or paint Bitcoin as a volatile tool for underground drug dealers has only created more interest for Bitcoin. Instead of attracting attention to a competing currency, the DoJ may just be trying to downplay its importance in hopes people forget about it.
I really have no idea why these large forfeitures keep occurring when Americans are not paying attention, but the pattern is too obvious to ignore.