The price of Bitcoin [BTC] has plummeted significantly in recent days. This was connected to two things: the German government selling off its Bitcoin, and the repayments from Mt. Gox. A recent discovery raised questions about why the government was offloading so many of its assets. Recent reports claim that the German government was not directly selling the king coin. Saxony, a small state in eastern Germany, sold these assets.
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How is Saxony Behind This?
The website Movie2k.to was found guilty of money laundering and other criminal actions. Earlier this year, the state’s Criminal Police Office took 49,857 BTC which is worth about $3 billion. The German Federal Criminal Police Office [BKA] started transferring thousands of Bitcoin to exchanges. This included Kraken, Coinbase, and Bitstamp around a week ago. This was an indication that the wallet was intended for sale. There are now only 23,788 BTC in the wallet.
In addition, the wallet is owned by the BKA of the nation, not Saxony. This is most likely because the police force was part of the first inquiry and had the technological know-how to manage such a substantial quantity of Bitcoin. But BKA just follows orders from the state and lacks decision-making authority. Speaking about the matter, Dr. Lennart Ante, co-founder and CEO of German-based Blockchain Research Lab said,
“The general prosecutor’s office of Saxony is responsible for liquidating confiscated assets, and the sell-off is hardly surprising. Seized assets are always liquidated within a certain period. This is a routine business process, although at a larger-than-normal scale.”
Ante also noted how once a judge grants permission for the state to do so. Confiscated Bitcoin can only be transferred or sold, with the earnings going toward the state budget. But this is not the case in this instance. States may ask to hold an emergency sale. This may happen if the asset is bound to increased volatility.
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