The recent news of the German government selling off all its Bitcoin holdings in just two weeks has raised many eyebrows in the cryptocurrency community. The move was explained in a statement by the Saxony Central Office for the Protection and Realization of Virtual Currencies. They announced that approximately 49,858 BTC were sold off starting on June 19, 2024, and culminating on July 12, 2024. The sale proceeds were disclosed to be around €2.63 billion, with the funds provisionally secured for criminal proceedings related to the “movie2k” complex.
The reason behind the substantial Bitcoin holdings of the German government dates back to the seizure of digital assets from the movie2k website. In January 2024, the government seized 50,000 BTC from the operator of the now-defunct movie piracy website, worth over €2.1 billion at the time. German law mandates the liquidation of seized digital assets, leading to the sale of the Bitcoin holdings as part of an “emergency sale” under Article 111p of the Code Of Criminal Procedure. The Dresden Public Prosecutor Office had to sell off the Bitcoins quickly due to the legal obligation to liquidate valuable assets before the conclusion of ongoing criminal proceedings.
The sale of the Bitcoins by the German government was also prompted by the threat or risk of significant loss due to Bitcoin’s inherent volatility and rapid price fluctuations. Speculation on prices or waiting for the value of the seized assets to rise was prohibited in an emergency sale. The authorities had to act swiftly to avoid any further loss in value. The mandate to carry out the sale as quickly as possible disregarded the current value of Bitcoin and other price-related factors, focusing solely on the liquidation of the assets.
The Saxony Central Office for the Protection and Realization of Virtual Currencies stated that the government conducted a “market-friendly and appropriate sale of Bitcoins.” Multiple BTC dumps were initiated in small tranches over a period of three and a half weeks to minimize the impact on the market. Approximately 49,858 BTC were sold on January 16, 2024, with an average purchase rate of about €39,400.
The swift and calculated sale of Bitcoins by the German government highlights the legal obligations and complexities surrounding the liquidation of seized digital assets. The need to avoid further losses due to Bitcoin’s volatile nature and the prohibition of speculative practices in emergency sales guided the decision-making process. While the sale may have surprised many in the cryptocurrency community, it was a necessary step mandated by law. Moving forward, similar cases are likely to arise, shedding light on the intersection of digital assets and legal proceedings.
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