German Bitcoin Sales Clarified by Expert

Recent reports of Bitcoin sales by German authorities are somewhat misleading. The assets are being sold by the government of the federal state of Saxony, which lacks the capacity to hold the coins, according to CoinDesk.

In January, the regional Criminal Police Office seized 49,857 BTC from the administrators of the pirate movie site Movie2k.

On June 19, a wallet controlled by the Federal Criminal Police Office of Germany (BKA) began transferring cryptocurrency to trading platforms, including centralized exchanges Kraken, Bitstamp, and Coinbase.

At the time of writing, the address holds 23,964 BTC valued at $1.42 billion.

The sale of digital gold has caused a nervous reaction in the crypto community, as well as criticism in the Bundestag.

However, this is not a failed investment strategy but a standard procedure applied to confiscated funds, according to Lennart Ante, co-founder and CEO of Blockchain Research Lab.

“Seized assets are always liquidated over a certain period. This is a routine business process, albeit on a larger scale than usual,” he noted.

The reason the bitcoins are held in the BKA wallet rather than by Saxony authorities is likely because the federal office was involved in the investigation and has the technical skills to handle such a volume of cryptocurrency, the expert suggested.

Meanwhile, the BKA acts not independently but solely under the jurisdiction’s government instructions.

In most cases, confiscated assets are transferred or sold with the proceeds going to the state budget by court decision. However, regions can initiate emergency sales, for instance, if there are risks of rapid devaluation or storage difficulties, Ante explained.

“In the case of Bitcoin, this can be said, at least from the perspective of volatility,” he added.

The remaining coins in the BKA wallet are likely to be sold soon. However, experts noted that in recent days, exchanges returned 5,366 BTC to the address. Presumably, the platforms were unable to sell such a volume of cryptocurrency at the target price.

As reported by Bloomberg, the liquidation of bitcoins by the BKA wallet was linked to the drop in prices below the psychological support of $60,000 in early July.