US Gov’t May Sell 69K Bitcoins After Supreme Court Decision

The United States Supreme Court has decided not to take up an appeal from Battle Born Investments regarding the forfeiture of 69,370 bitcoins that were initially associated with the Silk Road darknet marketplace. This ruling, marked as “CERTIORARI DENIED” in the Supreme Court’s publication on October 7 publication, effectively allows the U.S. government to confiscate and potentially liquidate the Bitcoins, which are valued at around $4.4 billion.

The US Government Retains Authority Over the Confiscated Bitcoins

The case stems from a civil forfeiture action initiated by the U.S. government after the closure of Silk Road. Battle Born Investments asserted legal ownership of the Bitcoins, claiming that in March 2018, they entered into a deal to acquire assets—including the Bitcoins stored in the “1HQ3” wallet—from the Chapter 7 bankruptcy estate of Raymond Ngan. They contended that these assets were connected to a figure known as “Individual X,” who allegedly stole the Bitcoins from Silk Road and was linked to Ngan.

However, U.S. authorities disputed Battle Born’s ownership claims, arguing that the Bitcoins were subject to forfeiture due to their association with unlawful activities conducted on Silk Road. In 2022, the U.S. District Court for the Northern District of California ruled in favor of the government, directing that it should “dispose of the defendant’s seized property in accordance with the law.”

Battle Born Investments subsequently appealed this decision, but on August 18, 2023, the Ninth Circuit Court of Appeals upheld the lower court’s ruling. The appellate court concluded that Battle Born “did not have standing to challenge the forfeiture,” indicating that their claims were speculative and lacked substantial proof of direct ownership of the Bitcoins.

After the appellate court’s decision, Battle Born requested a rehearing en banc, which was denied on December 12, 2023. Continuing their legal battle, they submitted a petition for a writ of certiorari to the Supreme Court on April 25, 2024, contending that the lower courts misinterpreted their standing and ownership claims.

The Supreme Court’s decision not to review the case effectively endorses the lower court rulings. By dismissing the petition, the Supreme Court reaffirms that Battle Born Investments lacks the requisite standing to contest the forfeiture of the Bitcoins. This decision transitions the 69,370 BTC from a seized designation to a forfeited and sellable asset, empowering the U.S. government to “dispose of the defendant’s seized property in accordance with the law.”

The government, backed by assertions from the U.S. Department of Justice, stressed that “mere claims of ownership, without substantial evidence, do not suffice for establishing standing in civil forfeiture proceedings.” The courts concurred, emphasizing the necessity of tangible evidence linking the asserted assets directly to Battle Born.

The potential liquidation of 69,370 BTC by the U.S. government could have considerable ramifications for the market. Currently valued at approximately $4.4 billion, the sale of such a large volume of Bitcoin could significantly impact market dynamics and investor perception. Historically, news of U.S. government sales has caused significant market movement.

Importantly, Donald Trump pledged to allocate all seized Bitcoin into a “strategic national stockpile.” Following this commitment, on July 29, the Biden-Harris administration transferred 29,800 Bitcoin to an undisclosed wallet address.

At the time of publication, BTC was trading at $62,356.