Happy Friday!

It’s been a nice, slow start to the year, but don’t get too comfortable. Inauguration Day is just around the corner.

Today we’re diving into the recent court decision that gave the US government the greenlight to sell off a stash of bitcoin. (Spoiler alert: We’re not so worried.)

Have a restful weekend and we’ll see you Monday morning.

😨 Friday scaries

If the US government securing court approval to dump $6.6 billion BTC has you spooked — wait til you hear this.

There’s over $3.4 billion BTC sitting in Mt. Gox wallets, waiting to be paid back to former users. 

The bulk of Mt. Gox’s bitcoin, totalling almost $6 billion at the time, was sent out about six months ago, when BTC was trading for around $65,000.

Better to also ignore the $5.8 billion BTC held by addresses tied to UK government agencies. 

It will presumably be offloaded at some point in a similar manner to the US, even if there haven’t been any reported or publicized plans to do so.

Here’s the good news: The US has never sold that much bitcoin at once. In its now 11-year history of selling seized bitcoin, the most it has ever released in one clip was $215 million worth back in March 2023.

That’s a lot when scaled against the current daily volume of the BTC/USD pair on Coinbase — $850 million. But considering billions are traded elsewhere, it probably wouldn’t be so bad for the price of bitcoin if the US were to sell a similar amount today.

For those regardlessly salty about the US bringing about the return of the overhang — making us nervous about monster dumps all over again — check out the bitcoin price chart above.

Each bubble represents the sale of bitcoin by the Feds. Small bubbles are smaller trades and vice versa.

Note the dollar figure pointed at each bubble. That’s how much the US government missed on each trade by selling too soon. Some of the initial sales, worth about $15 million at the time, would be the equivalent of nearly $5 billion right now.

Had the US held until today, it would be sitting on bitcoin worth $18.6 billion — which means $18.2 billion has been left on the table.

Luckily, If Lummis gets her way and the BITCOIN Act ever passes, it would only take the US one year to buy back all its sold bitcoin to date. 

Never mind that it would, technically, put the US government even further down the hole by almost $20 billion at current prices. A rising tide lifts all boats, eventually.

— David

Don’t panic. 

That’s the gist of the message from Asset Reality’s Aidan Larkin on this week’s Empire Roundup. Jason Yanowitz and Santiago Santos specifically asked him about all that US government bitcoin.

Basically, the recent court approval is par for the course for any civil forfeiture. And, no, it doesn’t mean that the US is immediately hitting the sell button.

“ At some point in the future, it'll just go through the normal government processes. There will be a civil forfeiture application hearing. They will get their green light and then it will fall into the normal Marshals process and public domain,” Larkin said. Asset Reality (which is a firm both Santos and Yanowitz invested in) helps governments manage seized assets, so Larkin is not just some armchair expert. 

From here, we’ll eventually see Coinbase move the bitcoin onchain before it’s sold off. 

Blaming the price action on the possibility of trying to time when the gov is going to sell some of its stash isn’t the right move, Larkin said. Instead, when you see that type of selling pressure, then it’s more than likely due to folks speculating and selling themselves. 

And now you know. 

So how did we get here? Well, a Nevada company called Battle Born Investments initially sought to prevent the US from offloading the bitcoin. However, a judge in California overruled their motion earlier this week, which allows the US to move on with the civil forfeiture, as Larkin noted. 

The likelihood of the bitcoin in question being funneled into a potential bitcoin strategic reserve is not very high either, so don’t get your hopes up. 

(ICYMI: This summer, Trump said he planned to make it so that the US holds all its current bitcoin and uses it as a strategic reserve.)

To sum it up: Any bitcoin to be sold must first go through older processes. We’re talking pre-crypto processes designed for seized assets such as gold.

Then, there could be a slew of agreements to be made, from using the generated funds to make victims whole to asset sharing agreements with other governments. It’s pretty complicated. 

Besides, as Larkin noted, would the US really want to use bitcoin linked to crimes for its reserve stash? Seems unlikely.

When dealing with the government, always assume there’s going to be a lot of bureaucratic red tape. What seems cut and dry probably isn’t. 

Instead, Yanowitz thinks we could see — if we get a reserve, mind you — the government buying up bitcoin mined on US soil to stash away. And, honestly, that sounds a lot more interesting than bitcoin simply linked to Silk Road.

— Katherine

Before the New Year, we asked: What grinds your gears?

63% of you said: “I’ve been here for years and still no generational wealth (I missed FARTCOIN).” Condolences. There’s still time.

This week, as we’re thinking of making some changes, we’re wondering: