US Marshals Won’t Meet Senator’s Deadline to List Cryptoassets
(Bloomberg) -- The US Marshals Service will not meet a Friday deadline to tell an influential senator the exact number of Bitcoin assets it controls and how it plans to manage them, according to two people familiar with the matter.
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US Senator Cynthia Lummis, a Wyoming Republican who chairs the Senate Banking Subcommittee on Digital Assets, sent the agency a letter two weeks ago requesting information about how much of the cryptocurrency the Marshals Service currently controls, what it plans to do with its holdings and whether it has taken any steps to measure the “effectiveness and timing” of past Bitcoin sales.
The Marshals Service did not respond to questions. A person familiar with the matter said the agency would brief Lummis and her staff in the weeks ahead and provide an inventory of the different tranches of Bitcoin it currently holds.
At issue are the digital assets seized by the US government during criminal inquiries. Just like cash, jewelry and real estate, Bitcoin and other cryptocurrencies are regularly confiscated by investigators and later auctioned off to repay crime victims or to support other law enforcement efforts. As of September, the Marshals Service said it had about $7.6 billion in total assets under its control.
Lummis has asked the agency for details on how it planned to auction more than 69,000 Bitcoin amassed by Silk Road, a former online black market where users could spend digital currency to buy drugs, forged passports, hacking tutorials and other illicit services. Silk Road’s operator, Ross Ulbricht, was sentenced to life in prison after he was convicted on charges of drug dealing, participating in a criminal enterprise and conspiracy. President Donald Trump pardoned Ulbricht of those charges this month.
The US Department of Justice said users spent more than 9.5 million Bitcoin on transactions, and that Silk Road collected about 900,000 in commissions. When investigators shut down the site in 2013, they seized laptops and began recovering hundreds of thousands of coins belonging to Silk Road and Ulbricht himself. Ulbricht agreed to forfeit those assets in a court proceeding separate from his trial, and the Marshals Service has been auctioning them off in tranches. The president’s pardon does not affect the forfeiture case.
About 140,000 Bitcoin connected to the Silk Road case were sold for roughly $330 apiece, the Justice Department announced in 2017. Today, those coins sell for more than $100,000 each. In Lummis’s letter, the lawmaker said that if the government had held onto all of the Bitcoin assets it has seized and sold, they would currently be worth almost $19 billion – a “staggering 98% loss in potential value,” the letter says.
Trump announced last week his administration’s intention to explore creating a “national digital asset stockpile” similar to US gold reserves. One way the new administration could build that stockpile would be by transferring in Bitcoin held by the Marshals Service. Lummis has proposed legislation that calls on the US Treasury Department to acquire 200,000 Bitcoin each year until the stockpile hits 1 million tokens – about 5% of the global supply.
Lummis announced Wednesday that her committee plans to hold public hearings on the proposed Bitcoin stockpile.
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