The German state has begun auctioning off confiscated bitcoin worth €2.5 billion in a sale that may have contributed to a recent slump in the cryptocurrency’s value.
Authorities impounded a digital wallet containing nearly 50,000 bitcoin from the owners of Movie2k, the now-defunct film piracy website, in January. It is thought to have been the largest seizure of its kind in Germany.
The haul has saddled German finance officials with the task of playing the cryptocurrency markets with a sum worth more than the annual public housing budget for the state of Saxony, which is expected to be the beneficiary of the sale.
At first they benefited from a substantial bitcoin rally over the first three months of the year, when the euro-denominated value of the holding rose from about €2 billion to €2.9 billion. However, they appear to have started selling in the midst of a downturn, as the value of bitcoin in euros has fallen by more than 17 per cent over the past month.
According to Arkham Intelligence, a cryptocurrency analysis website that specialises in tracing the anonymous owners of bitcoin wallets, about a fifth of the “Saxon treasure” has been moved since the middle of June. It suggests the bitcoin are being transferred on to exchanges by the German federal criminal police office on behalf of the state government of Saxony.
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There has been some speculation in the German media that the scale of the auction might have contributed to the latest drop in global bitcoin prices.
The German federal finance ministry was contacted for comment.
The Saxon attorney-general’s office said that it could provide no information about the bitcoin as the underlying case was continuing. It had previously said it was still weighing up what to do with the cryptocurrency.
Despite the weakening of the bitcoin market, Joana Cotar, an independent German MP who used to represent the radical right-wing Alternative for Germany party, accused the German government of short-changing the taxpayer with the auction. Cotar, a crypto enthusiast, urged the authorities to cease the “over-hasty” sell-off and instead to retain the bitcoin holdings as a “strategic reserve currency”. “It’s not just pointless, it’s counterproductive,” she wrote on Twitter/X.
GlobalData, another analysis company, estimates that the Saxon treasure temporarily makes Germany the fourth largest state holder of bitcoin in the world after the United States, China and Britain.
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Apart from El Salvador, which has bet on bitcoin as a reserve currency, most governments have become market players by accident after seizing crypto assets in criminal investigations. America acquired most of its holding from the shutdown of Silk Road, once a sizeable marketplace for drugs and other illicit goods and services on the dark web.
