Fact Check: Does U.S. Government Hold More Than 200,000 Bitcoin?

The recent surge in the price of Bitcoin, in the wake of global banking pressures and the collapse of some mid-tier lenders, has renewed interest in cryptocurrencies. There has even been speculation by analysts at Standard Chartered that the price of Bitcoin could rise to $100,000 by the end of 2024.

The decentralized cryptocurrency, the value of which was punctured by a series of scandals at major crypto platforms like FTX, has seen its price increase to around $30,000 in April from lows of nearly $13,000 in November 2022.

Among the speculation helping to drive the rise was a social media post that suggested the U.S. government is one of the largest holders of Bitcoin in the world.

The Claim

A Reddit post, published on March 26, 2023, which received more than 2,000 upvotes claimed that "The US Government holds 205,515 bitcoins more than 1% of the Circulating supply."

The Facts

The U.S. government's approach to cryptocurrency has been complicated, to say the least, making the notion that it owns such a huge quantity of Bitcoin surprising.

Despite Democrats, and some Republicans, receiving millions in donations from FTX founder Samuel Bankman-Fried, the White House earlier this year penned a letter documenting financial risks associated with cryptocurrency.

"Legislation should not greenlight mainstream institutions, like pension funds, to dive headlong into cryptocurrency markets," the letter read.

"In the past year, traditional financial institutions' limited exposure to cryptocurrencies has prevented turmoil in cryptocurrencies from infecting the broader financial system.

"It would be a grave mistake to enact legislation that reverses course and deepens the ties between cryptocurrencies and the broader financial system."

Nonetheless, despite skepticism both among politicians and certain sections of the public, Bitcoin's revival suggests there is continued value in the digital asset.

So, could the U.S. government be a Bitcoin whale, despite it's moves to restrict the currency's usage?

As the Reddit post explains, the majority of these holdings come from seizures, some of which have been publicized by authorities.

The post mentions three seizures, two of which were made last year.

In February 2022, the Department of Justice announced it had seized 94,636 Bitcoin from a hack of the Bitfinex cryptocurrency exchange Bitfinex.

Ilya Lichtenstein and his wife Heather Morgan, then 34 and 31 respectively, were charged with conspiracy to commit money laundering. Although it was reported the couple was considering a plea deal following their arrest, the DOJ has made no further announcements about the case. Newsweek has contacted the Department for comment.

Agents were able to recover more than 94,000 Bitcoin that had been stolen.

Then, in November 2022, the United States Attorney's Office in the Southern District of New York announced a $3.3 billion cryptocurrency seizure from James Zhong, a fraudster who had unlawfully obtained over 50,000 Bitcoin from the Silk Road dark web marketplace. Zhong, 32, of Gainesville, Georgia, and Athens, Georgia, pleaded guilty to one count of wire fraud. He was sentenced to a year and a day in jail by a judge in New York.

The total seizure came to around 51,351 Bitcoin, valued at more than $3.3 billion, making it the largest cryptocurrency seizure in U.S. history.

The Reddit post also mentions a case from 2020, when the U.S. Attorney's Office, Northern District of California, seized 69,370 Bitcoin from a hacker only named "Individual X" who had stolen the assets from Silk Road.

Bringing these three cases together would make the total of U.S. Bitcoin seizures to more than 200,000, as the Reddit post describes.

However, in the past few months alone, the U.S. government was reported to have transferred $1 billion of Bitcoin from wallets connected to the seizures to new addresses on cryptocurrency exchange Coinbase.

According to analytics firm PeckShieldAlert, three transfers of more than 50,000 Bitcoin in total were made from U.S. law enforcement agency wallets.

This would make a significant dent in that total shared on Reddit. However, it is unlikely to be the only wallets that the U.S. government has control over.

We know as well that the U.S. government has sold other, much smaller Bitcoin holdings from a variety of cases. For example, in 2020 it announced the auction of 4,040 Bitcoin through the U.S. Marshalls Service, which handles the seizure of assets.

An audit of the management of its seized cryptocurrency from 2017-2022 also mentioned a handful of seizures, although not enough to place any firmer claim as to whether the government still holds 200,000 Bitcoin or more.

Anchorage Digital, an asset platform, was made the custodian of the Marshals Service cryptocurrency seizures in 2021. Neither Anchorage nor the Marshals Service replied to emails Newsweek sent asking to comment on the size of the U.S.'s seized assets.

So questions still remain: how much does the government hold and how is it recorded?

To find out more, Newsweek spoke to Professor Gavin Brown, a senior lecturer in financial technology at the University of Liverpool.

Brown said that short of tracking each crypto seizure and subsequent auction, there was no central archive or database available that he could find which listed holdings.

"I did do some research on it, thinking we might be able to get something. But the only real things that hit the headlines are the seizures, the auctions which regularly take place, and— obviously with the benefit of hindsight— whether those auctions were successful.

"I guess it wouldn't be beyond the wit of man to go and try and work that out, to follow every auction and follow every seizure that's been announced to get a ballpark figure, but I don't know of a central, easy place which stores that information.

"The advantage of the company when they hold Bitcoin is that it's on their balance sheet. You can check their 10-K or 10-Q they have to submit to the SEC, whereas... I've not seen a central, clean place where you can say that's your number."

Part of this secrecy could be strategic. For example, were the U.S. to hold onto its cryptocurrency seizures (in the context that price volatility could make them more valuable) that act of holding the assets (which may be sensible) could be seen as a tacit endorsement of cryptocurrency at large, as Brown explained.

"Government, normally, when they seize stolen goods in some way, their job is to dispose quickly, and to maintain a fair or reasonable price," he said.

"But when they're holding things like Bitcoin, the price is incredibly volatile. So they have a lot of, kind of, friction, in the sense that do they hold Bitcoin for the price to go up to speculate, and go up and make more money for it, or do they sell it now but potentially miss out on future gains?"

Brown highlighted how, in 2014, the U.S. Marshalls Service sold 29,656 Bitcoin to investor Tim Draper.

At that time, Bitcoin was trading at about $630, making the value of Draper's investment more than $18 million. Today, it would be worth nearly $890 million. Sold at Bitcoin's all-time high of around $68,000 in November 2021, the figure would be more than $2 billion.

"So technically, you know, the US taxpayers just missed because their government sold Bitcoin cheap," Brown added.

"But by the same token, if you excuse the pun, if they hold Bitcoin to try and get more value for it, the signal that sends to the society and economy at large is that the government's longed Bitcoin, they love it.

"You know that in the same way that I might invest in it to make money, the government's doing the same thing, so they're really between a rock and a hard place of dumping too early and or maybe holding on but then being criticized for almost doublespeak.

"You know, criticizing Bitcoin in the one breath, but then trying to make some money off it in the second breath."

However, the government may manage its Bitcoin seizures, but there is simply not enough clear data to say for certain whether its seized holdings may have reached 205,000.

The recent resurgence in the value of Bitcoin has been attributed to the collapse of Silicon Valley Bank and Signature Bank, sparking the biggest U.S. banking crisis since 2008.

Investor and entrepreneur Anthony Pompliano said in a tweet last month: "Very clear signal from the market that a decentralized currency that allows you to become your own bank is valued in light of the recent developments."

The Ruling

Needs Context.

Seizure records show that the U.S. government has held around 200,000 Bitcoin. These are just among its major seizures, connected to fraud and other criminal activities associated with cryptocurrency.

It has also sold a significant proportion of its seizures and as it doesn't keep a centralized, public resource that provides an itemized list of all the cryptocurrency it holds, which may well be a deliberate political strategy, we can't say for certain the total amount it may or may not hold.

FACT CHECK BY Newsweek's Fact Check team