US government misses out on $600 million payday by selling dirty bitcoins too early

Key Points
  • U.S. authorities shut down dark web marketplace Silk Road in 2013 and seized founder Ross William Ulbricht's bitcoins.
  • Ulbricht withdrew his claim to the digital coins last week.
  • The U.S. Department of Justice said Friday that it had sold those 144,336 bitcoins for about $48 million, or $334 each on average compared with Tuesday's price of around $4,260.
US government misses out on $600 million payday by selling dirty bitcoins too early

The U.S. Department of Justice could have made at least ten times more than the $48 million it took in from the bitcoin holdings of dark web marketplace founder Ross William Ulbricht.

The U.S. government seized 144,336 bitcoins gained from Silk Road's illegal activities that were found on Ulbricht's laptop, Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced Friday.

Law enforcement authorities shut down Silk Road, which sold illegal drugs and other products, in 2013, and Ulbricht was found guilty in 2015. But the marketplace founder disputed the U.S. seizure of the bitcoins until last week, when he withdrew his claim.

"These Bitcoins were ultimately sold by the United States Marshals Service pursuant to Court order for $48,238,116," Friday's release said.

Bitcoin five-year performance

Source: CoinDesk

That means that when the U.S. authorities sold bitcoin in the wake of the 2013 Silk Road crackdown, the average selling price was $334 each.

If the government had held onto the digital coins, their total worth would be more than $600 million at Tuesday's price of around $4,300, according to CoinDesk.

The U.S. Marshals don't look for investment opportunities and there was no reason for them to hold onto the bitcoins, Justice Department spokeswoman Dawn Dearden told CNBC.

CNBC reported in late August that law enforcement is finding it easier to track criminal activity in bitcoin, causing some illegal activity to move into other digital currencies.