The German government is now one of the world’s largest Bitcoin (BTC) holders after police in the state of Saxony confiscated approximately 50,000 BTC as part of a sting operation involving an online piracy website.
“In an investigation by the Dresden General Prosecutor's Office, the Saxony State Criminal Police Office and the tax investigation of the Leipzig II Tax Office as the Saxony Integrated Investigation Unit (INES), almost 50,000 Bitcoins were provisionally secured in mid-January 2024,” the Saxony police said in a statement.
The U.S. Federal Bureau of Investigation (FBI), the German Federal Criminal Police Office (BKA), and a Munich forensic IT company assisted in the investigation of the suspected unauthorized commercial exploitation of copyrighted works under the Copyright Act.
Two male individuals, a 40-year-old German national and a 37-year-old Polish national, were identified as the primary persons of interest in the matter. They are said to have purchased the BTC with the proceeds from “a leading German company that pirated material until the end of May 2013.”
German authorities called this “the most extensive security of Bitcoins by law enforcement authorities in the Federal Republic of Germany to date,” saying the tokens were seized “after the accused voluntarily transferred them to official wallets provided by the BKA.”
The large number of Bitcoins held, combined with the time period when the piracy activities took place, suggests that the tokens were purchased when BTCs price was significantly lower than it is today. At the time of writing, the seized BTC is worth roughly $2.17 billion.
No decision has been made on what German authorities will do with the confiscated funds.
The seizure of Bitcoin and other cryptocurrencies has made several governments, including the U.S. government, some of the largest holders in the world. As of Oct. 31, data from Glassnode suggested that authorities in the U.S. had seized a total of 210,429 BTC connected to various crimes.
Last week, the U.S. government announced the planned sale of nearly 2,934 BTC worth nearly $118 million following the Jan. 8 sentencing of Silk Road Xanax dealer Ryan Farace and his 72-year-old father Joseph Farace for money laundering conspiracy.
This sale represents only 1.5% of the estimated 194,188 BTC ($7.7 billion) still held by the U.S. government, which were obtained from three seizures made during criminal investigations. This includes 51,326 BTC seized from Silk Road hacker James Zhong, 69,369 BTC obtained from the Silk Road in Nov. 2020, and 94,643 BTC seized in Jan. 2022 in connection with the 2016 Bitfinex hack.
While some have worried that the government could spark a selloff in Bitcoin’s price if they were to dump their holdings on the open market, the total held represents less than 1% of the circulating supply and is significantly lower than the amount held by Grayscale, which has been seeing significant outflows following the spot Bitcoin ETF launches.
A total of 106,575 BTC worth $4.2 billion have been sold out of GBTC since it converted to an ETF on Jan. 11, with the latest outflow being 10,871 BTC on Jan. 24. This is equivalent to more than half of the total held by the U.S. government, yet Bitcoin’s price has remained relatively resilient.
It’s possible that any future large sales, be it by a government or a fund, will find willing buyers in the market as the ETFs by BlackRock and Fidelity now hold more than 100,000 BTC combined less than three weeks after launch. This suggests that the level of demand remains healthy, and any large offloads will be absorbed by the market.
