What happens when the world’s most powerful government gets its hands on a fortune in digital gold? It sells it for peanuts, apparently. Back in 2013, the FBI shut down Silk Road, the notorious darknet marketplace, and seized approximately 174,000 Bitcoin from its founder Ross Ulbricht and various users.
Instead of hodling, the US government decided to auction off these digital assets. The first sale happened in June 2014, with venture capitalist Tim Draper scooping up nearly 30,000 BTC at around $640 each. Not a bad deal for him.
But that was just the beginning. In December 2014, another 50,000 Bitcoin hit the auction block. Then came March 2015 with 50,000 more. November 2015 saw the final major auction of 44,000 BTC. The average sale price? A measly $380 per coin. For those keeping score, that’s about $151 million in total proceeds.
The US government fire-sold Bitcoin for pocket change while accidentally kickstarting a trillion-dollar revolution.
Seems like a lot, right? Wrong. Those 50,000 coins from a single auction would be worth a staggering $4.4 billion today. The entire seizure of 174,000 Bitcoin? Over $15 billion at 2021’s peak prices. Talk about dropping the ball.
The feds had their reasons. Bitcoin was still a weird internet money thing back then. Officials worried about its legality, lacked proper storage infrastructure, and wanted to convert the digital assets to “real money” ASAP. Plus, they needed to show cybercriminals that crime doesn’t pay. Ironic, considering how much it would have paid had they waited.
These auctions weren’t all bad news for Bitcoin, though. They brought institutional attention to the crypto market and legitimized it in a strange way. The government fundamentally said, “This stuff has value; come buy it from us!” This sale inadvertently categorized Bitcoin as a large-cap cryptocurrency well before it reached its current market dominance.
Eventually, agencies got smarter about handling seized crypto. They developed better storage solutions and more strategic selling approaches. Much like the current market where over $3.50 billion in assets has been withdrawn from Spot Bitcoin ETFs since early February, government decisions can dramatically impact crypto valuations. But that first massive sell-off? A $15 billion oopsie that’ll go down in financial history. Sometimes even Uncle Sam makes rookie mistakes. This stark contrast in valuation mirrors today’s market volatility where Bitcoin dropped nearly 10% in a single trading day.
