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Breaking News: Coinbase Confirms DOJ Investigation Following Major Security Incident

Here’s What Happens To All Of The Crypto Assets The IRS Seizes

Best Owie
Best Owie
3 years ago
3 mins read
picture of a bitcoin locked behind prison bars

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Crypto continues to be a controversial asset when it comes to the law and crime. Just this fiscal year alone, the IRS has seized $1.2 billion worth of cryptocurrency. The U.S. government started seizing crypto assets during the Silk Road shutdown of 2013. And so far since, there has been crypto seized from individuals every year.

Often the public is not privy to what happens to seized assets. Once seized, the government has the discretion to dispose or store these assets the way it deems the best. A good amount has been seized by the IRS alone over the years. Assets whose worth run into the billions of dollars since cryptocurrencies became popular.

Related Reading | Wells Fargo Now Offers Cryptocurrency Investment To Clients

These assets are usually taken in search and seizures operations carried out by federal agents. At which point the assets seemingly disappear under the jurisdiction of the government. To this end, this CNBC report gets in-depth with current and federal agents to figure out what happens with these seized assets.

Confiscated Crypto Assets Get Auctioned Off

Jarod Koopman, who is the director of the IRS’ cybercrime unit, said that seized assets are auctioned off. It does not matter if it’s crypto, boats, or cars. These auctions are usually carried out after investigations into the crimes are concluded.

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Auctions like these are not new for the government. There have been auctions carried out over the years to facilitate the sale of seized assets the government holds in its wallets.

One example of these auctions is the 11 lots of cryptocurrencies that were opened up for bidding this year in a four-day auction. One of the lots, Lot 4TQSCI21402001, had 150.22567153 Bitcoins and 0.00022893 Bitcoin Cash. At today’s price, these assets would be worth more than $21,000.

Total crypto market cap from TradingView.com

Total crypto market cap continues to hold steady | Source: Crypto Total Market Cap from TradingView.com

Auctions like these happen every year, given the amount that the government seizes every year. Some of the seized amounts might be recovered from criminals. While others could be seized as part of tax non-compliance cases.

The Bust That Started It All

Although Bitcoin was created in 2009, seizures of crypto assets did not begin until 2013. This was following the unprecedented use of bitcoin as the main mode of payment in Silk Road. An online black market where users could buy pretty much anything. From hard drugs like cocaine to arms dealing.

The takedown of Silk Road saw federals seizing tens of thousands of Bitcoin. And the government had no idea what to do with these coins. With one seized wallet holding as much as 30,000 bitcoins from the seizures.

Related Reading | Why Another Wave Up For Altcoins Is Probable According To BTC Dominance

Following this, the government had to figure out how to dispose of these assets after the investigation was closed. There were no open exchanges back then where the coins could have been sold. Thus, the Marshals Service had to come up with a way to get rid of the assets. This gave birth to the first auction of crypto assets.

The 30,000 bitcoins recovered from a single wallet were sold at auction to billionaire Tim Draper. The bitcoins sold for $19 million in 2014, when bitcoins were only worth about $600 apiece.

Tim Draper’s lot of coins, if kept until today, would be worth over a billion dollars given current market prices. Showing massive returns in just six years after the coins were purchased.

Related Reading | Bitcoin Is More Oversold Than It Was At ATH In April, Says Analyst

Assets seized by the government will no doubt continue to be auctioned off to the highest bidder. Even though coins might be worth more if kept for the future, the U.S. does not play the crypto markets. Hence, seized assets will continue to be sold at auctions.

Featured image from CIO.com, chart from TradingView.com
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Best Owie
Best Owie

Best Owie

Best Owie is a seasoned managing editor with a wealth of experience currently serving as the Managing Editor at NewsBTC. Best is a highly skilled professional with a track record of producing engaging and informative content. With a keen eye for detail and a passion for accuracy, Best is committed to ensuring that each article published meets the highest standards of quality.

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Best has over six years of experience in the crypto industry and has overseen the creation and publishing of thousands of articles over the years. Best is always abreast of everything that is going on in the crypto industry in order to create and curate the most relevant content for readers. This shines through in Best’s publications, which are always clear and concise, enabling easy reading and understanding for all.

Best is also an avid learner and advocate for new technology. This has seen Best dive into topics in areas such as decentralized finance (DeFi), non-fungible tokens (NFTs), Layer 2 blockchains, etc. In addition to this, Best is a vocal member of the crypto community across various social media platforms such as X and Reddit. Best’s work garners tens of thousands of readers monthly, who rely on the information in these publications to keep up-to-date with everything happening in the crypto community.

Best’s articles explore breaking news, intricate systems such as yield farming, liquidity pools, and other decentralized finance (DeFi) systems. This is because Best understands the importance of information to gaining financial freedom and believes that everyone should have access to this information.

Best also believes in leveraging the blockchain for philanthropy to create the most positive social impact. This involves work with charitable organizations focused on financial literacy and education. With each article, Best lends a voice to important issues such as a more financially inclusive future, transparent systems for growth and development, and technology that is not self-serving but one that serves all of humanity.

When not curating engaging content, Best can be found reading a book with a cup of hot chocolate, enjoying a Netflix series, or exploring the outdoors with Green - the world’s most quiet and well-behaved Husky. Best’s interests also span other industries such as art, finance, and security, attending seminars and conferences in not just the crypto industry but other industries as well.

As an animal lover, Best is also involved with charities for animals, local shelters, and rescues. Best is also involved in local events that promote inclusivity, such as being a prominent member of hiking clubs and a cycling club, as well as being a part of a very happy group of animal lovers.

Best is a true professional in every sense of the word, with an exceptional dedication to producing high-quality work. This shines through in Best's work on and off the clock. These include advocating for inclusive crypto education for all, the impact of financial illiteracy, and the benefits of adopting new technologies such as cryptocurrencies. Best’s prolific career in the media industry is a testament of how hard work and dedication pays.

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Reason to trust

Strict editorial policy that focuses on accuracy, relevance, and impartiality
Created by industry experts and meticulously reviewed
The highest standards in reporting and publishing
How Our News is Made

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