The German government has started auctioning confiscated bitcoins worth €2.5 billion. This sale may have contributed to the recent drop in cryptocurrency value.
In January, authorities seized a digital wallet that contained nearly 50,000 Bitcoins from the owners Movie2k, a now-defunct website for film piracy. This seizure is believed to be the largest of its kind ever made in Germany.
The haul of cryptocurrencies has left German finance officials with a task to play the cryptocurrency markets. It is worth more than the budget of public housing for the state of Saxony which will be the recipient of the sale.
They initially benefited from the substantial rally in bitcoin over the first three months of the year when the euro-denominated holding increased from €2 billion up to €2.9 billion. They appear to have sold in the middle of a recession, since the price of bitcoin has dropped by over 17 percent in the last month.
Arkham Intelligence is a cryptocurrency website that specializes in tracing anonymous bitcoin wallet owners. According to the website, a fifth of “Saxon treasure” was moved since mid-June. The Bundeskriminalpolizei is transferring bitcoins to exchanges on behalf of Saxony’s state government, according to the report.
In the German media, there has been speculation that the size of the auction could have contributed to bitcoin’s recent drop.
For a comment, the German Federal Finance Ministry was contacted.
The Saxon Attorney-General’s Office said it was unable to provide any information on bitcoin because the case in question is still ongoing. It had said previously that it was still deciding what to do about the cryptocurrency.
Joana Cotar is an independent German member of parliament who previously represented the radical right-wing Alternative for Germany. She accused the German government, despite the weakened bitcoin market, of shortchanging taxpayers with the auction. Cotar, who is a crypto enthusiast and a member of the Alternative for Germany party, called on the German government to stop the “overly-hurried” sale-offs, instead retaining the bitcoins as “strategic reserves”. She wrote: “It is not only counterproductive, but also pointless.”
GlobalData, a second analysis company, estimates the Saxon Treasure temporarily makes Germany fourth in the world for bitcoin holders after the United States of America, China, and Britain.
Most governments, with the exception of El Salvador, have become players in the crypto market by accident, after seizing crypto assets during criminal investigations. America acquired the majority of its holdings from the closure of Silk Road. Silk Road was once a large marketplace for illicit goods and services and drugs on the dark internet.
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