Here’s What Happens To All Of The Crypto Assets The IRS Seizes
August 07 2021 - 1:00PM
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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. Related Reading
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As NFT 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 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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