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US Government To Release Half Its Bitcoin Intended for Trump’s Strategic Reserve

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8 hours ago

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Earlier this morning, the U.S. government announced via a court document that stolen bitcoin from the Bitfinex hack in 2016 should be returned to the exchange in-kind. This bitcoin, as seen publicly on the blockchain via Arkham Intelligence, totals 94,643 BTC currently worth $9.4 billion at the time of writing.

Just five days before pro-Bitcoin Donald Trump is sworn into office for a second term, the U.S. government seems to be on the verge of sending a large chunk of U.S. held bitcoin back to Bitfinex. Last summer, at The Bitcoin 2024 Conference in Nashville, Donald Trump pledged to create a national strategic bitcoin stockpile using the bitcoin already held by the government obtained from hacks, seizures, etc. According to Arkham Intelligence data, the U.S. currently holds 198,109 bitcoin worth over $20.1 billion. If these coins are to be sent back to Bitfinex — that would cut Trump’s promised strategic reserve by 47.77% down to 103,466 BTC.

It makes me bullish that if the government is going to be acquiring mass amounts of bitcoin in the near future and over the long term, then I would want them to start from as close to 0 as possible, because that would require them to market buy more and push the price higher. The bitcoin should be returned in-kind, the court document stated, meaning those coins will not need to be sold for dollars, relieving any downward pressure on bitcoin’s price from that would be sale. Plus bitcoin getting returned to its rightful owner sounds like the right thing to do, and I’m sure Bitfinex will be thrilled to get their coins back.

However, if the U.S. government is going to be mass buying bitcoin for a strategic reserve, then Wyoming Senator Cynthia Lummis’ proposed legislation for that would need to be signed into law. As it stands from just Trump’s promise, he would just initially keep the seized bitcoin held on the government balance sheet as the strategic reserve, with the potential of acquiring more BTC by other methods, but made no hard promise on that. Senator Lummis’ proposed bill would see the United States buy 200,000 bitcoin per year, for 5 years, until it has accumulated a total of 1,000,000 bitcoin.

However this all plays out, the strategic bitcoin reserve will be bullish for the country and for Bitcoin in general. Obviously, Senator Lummis’ bill would be the far more bullish of the potential outcomes, because it would market buy back all the bitcoin it plans to give back to Bitfinex, and then 905,357 BTC more. That amount of sheer buying demand would most likely send the price of bitcoin skyrocketing, especially as other governments around the world start buying as well to keep up with our government’s purchases.

Even if Lummis’ bill does not come to fruition, and we only get the reserve that Trump promised, I believe that is still enough to make other governments FOMO into creating their own reserve as well.

There is only about 450 new bitcoin getting mined every day, and with institutional bitcoin purchases already outpacing the new supply of BTC mined this year, things could get really crazy, really fast. Buckle up.

This article is a Take. Opinions expressed are entirely the author’s and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.





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Bitcoin

Major Victory For Bitfinex: DOJ Declares $9 Billion In Stolen Bitcoin Should Be Returned

Published

12 hours ago

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January 16, 2025

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The US Department of Justice (DOJ) has stated that around $9 billion in Bitcoin, taken from the crypto exchange Bitfinex in a 2016 hacking incident, ought to be returned to the exchange.

This claim arises from a legal document submitted by the DOJ, which indicated that there are no recognizable victims in this specific case within the existing legal structure.

Bitfinex To Potentially Reclaim Stolen Bitcoin

The court documents, submitted on Tuesday, explain that the recovery of the stolen Bitcoin—specifically 94,643 BTC, along with amounts from various hard forks—should be returned to Bitfinex. 

The DOJ argued that under the Mandatory Victim Restitution Act (MVRA), there is no legal basis to classify Bitfinex or its account holders as victims of the specific offenses for which the defendants were convicted.

The defendants, Ilya Lichtenstein and Heather Morgan, were convicted of Money Laundering Conspiracy, but crucially, they were not charged with the initial hack that resulted in the theft of the Bitcoin. 

According to the DOJ, their subsequent actions did not directly cause the losses incurred by Bitfinex. The legal definition of a “victim” as stated in the MVRA requires a direct and proximate harm resulting from the commission of a specific offense, which in this case reportedly does not apply.

The DOJ’s filing emphasizes that, while no mandatory restitution can be ordered under the current convictions, the court retains the authority to grant voluntary restitution. 

This means that, as part of their plea agreements, the defendants have agreed to return the stolen assets to Bitfinex. The restitution order proposed by the DOJ would encompass all funds recovered from the Bitfinex Hack Wallet.

While this ruling marks a potential financial windfall for Bitfinex, it also opens the door for further legal complexities. The government is in the process of a third-party ancillary forfeiture proceeding to address other seized assets linked to the defendants’ laundering activities. 

These additional assets, which were involved in complex laundering schemes, may not be categorized as specific property lost by Bitfinex and its account holders.

The 2016 Bitfinex hack, one of the largest in cryptocurrency history, has had lasting repercussions, leading to ongoing debates about regulatory standards and victim restitution in the digital asset space.

As this situation develops, the parties involved in the case will be focused on the court’s ultimate ruling about the return of the seized Bitcoin and its impact on the future of cryptocurrency regulation and restitution methods for future cases.

The DOJ’s efforts aim not only to address the financial losses experienced by Bitfinex but also to clarify the legal ramifications related to digital asset theft.

Bitcoin

At the time of writing, Bitcoin has managed to regain its bullish momentum with a 4% rise in the past 24 hours towards the $99,100 level. 

Featured image from DALL-E, chart from TradingView.com



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Hackers apparently steal $20m from US government wallets

Published

3 months ago

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October 25, 2024

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U.S. government crypto wallets may be compromised, as observers alerted the public to suspicious on-chain transactions.

According to Arkham, unknown hackers have possibly stolen $20 million in seized cryptocurrencies like Ethereum (ETH), Tether (USDT), and Circle USD Coin (USDC) from U.S. government-controlled addresses.

The developing story, corroborated by on-chain sleuth ZachXBT on Telegram, might even involve funds confiscated from the Bitfinex hackers. Arkham stated that address 0xc9E received seized assets from at least one wallet mentioned in the Bitfinex court case documents.

Bitfinex was hacked in 2016 by Ilya Lichtenstein and his rapper partner Heather Morgan, AKA Razzlekhan. The duo successfully stole about $8 billion in Bitcoin (BTC) from the crypto exchange. Nearly a decade later, federal prosecutors asked for a five-year sentence to be issued to Lichtenstein.

Transactions suggest the hackers started selling and laundering the funds after breaking into U.S. government wallets, Arkham said in its Oct. 24 post about the suspicious activity.

The funds were moved to wallet 0x348 which has begun selling the funds to ETH. We believe the attacker has already begun laundering the proceeds through suspicious addresses linked to a money laundering service.

Arkham

Before the blockchain analytics provider flagged the U.S. government transactions, Arkham noted that government wallets withdrew over $6.5 million in crypto from decentralized finance lender Aave. Etherscan data also showed that one U.S. government address paid up to $1,000 in Ethereum fees to move about $100,000 in cryptocurrencies.

This is a developing story.





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