Donald Trump’s campaign promise to create a national Bitcoin stockpile with cryptocurrency held by the US government alarmed former prosecutors, who said it would divert seized digital assets that otherwise would be used to compensate victims of crime.
If he’s elected president, the US would keep all Bitcoin the government holds or will acquire, transforming “that vast wealth into a permanent national asset to benefit all Americans,” Trump said at the Bitcoin 2024 conference on July 27.
With this philosophy of “never sell your Bitcoin,” experts say Trump flouted a central tenet of US forfeiture law: The government sells seized assets to repay crime victims and support law enforcement.
“Much of that ‘stockpile’ likely belongs to the victims of hacks, ransomware, and scams,” said Amanda Wick, a former federal prosecutor and a principal at Incite Consulting. “That’s money that should go back to victims. If they knew that, I don’t believe the crypto community would say that you should screw victims to stockpile Bitcoin.”
Trump’s comments came as he courted the crypto crowd after abandoning the anti-crypto stance he held while president, when he said the asset class was riddled with crime. Facing a tightening race, Trump is pursuing potentially tens of millions of dollars in donations from crypto advocates. The Trump campaign did not reply to a request for comment on this story.
His call for a national stockpile comes as the US holds about $12 billion worth of cryptocurrencies, including 203,238 Bitcoin, 50,224 Ether and 121.7 million of Tether’s USDT stablecoin that tracks the dollar, according to blockchain analytics firm Arkham Intelligence.
The seized crypto came from criminal and civil forfeiture cases brought by federal prosecutors and overseen by US judges. Some seizures involve notorious cases. Ilya Lichtenstein and his wife Heather Morgan, a rapper who called herself the “Crocodile of Wall Street,” conspired to launder $4.5 billion in stolen Bitcoin. The US seized about $4 billion in stolen funds, and both pleaded guilty.
In another case, a Georgia man, James Zhong, stole more than 50,000 Bitcoin from the Silk Road drug-trafficking site. Silk Road served as a black-market bazaar that used Bitcoin in its payments system. Zhong, whose cache reached $3.35 billion in value, also pleaded guilty.
The crypto sits in funds administered by the Justice Department and the US Treasury until it’s sold — a job that was handled for several years by the US Marshals Service. But persistent problems led the marshals to hire Coinbase Global Inc., the biggest US crypto exchange, to provide custody and trading of its digital assets.
In his speech in Nashville, Trump decried what he described as an overreaching government that unfairly took digital assets.
“Let’s take that guy’s life, let’s take his family, his house, his Bitcoin,” Trump said. “It’s been taken away from you because that’s where we’re going now, that’s where this country is going. It’s a fascist regime.”
Trump also pledged to commute the sentence of Ross William Ulbricht, who is serving life in prison for creating Silk Road.
Former federal prosecutor Elizabeth Boison, who handled forfeitures at the Justice Department, said the proposed Bitcoin reserve would not comply with current laws.
“The primary objective of asset forfeiture is to deter and punish criminal activity by depriving criminals of property used or acquired through illegal conduct,” Boison said. Trump’s proposal, she added, is not “consistent with the purpose of asset forfeiture or with what the law currently allows for forfeited assets.”
The US government only obtains assets after getting final orders of forfeiture from a judge, added Laurel Loomis Rimon, another former federal prosecutor. The government isn’t in the business of making money off of those assets, as Trump suggests, she said.
“I take it that he’s trying to generate favor with the cryptocurrency industry,” Rimon said. “It doesn’t make a lot of sense.”
Cre: Bloomberg
David Ma was born in 1980 in California, is a Vietnamese American, known as one of the entrepreneurs and investors in the field of cryptocurrency and stock market. In 2006, he graduated from Stanford University with honors and began his career in business.
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