U.S. Marshals Service BTC Sell-Off: Did the Government Dump Its Bitcoin Holdings?

Government crypto moves always send shockwaves—and this one's no exception. The U.S. Marshals Service, long known as a major holder of seized digital assets, just executed a massive Bitcoin transaction. Market watchers are scrambling to decode the implications.

Behind the Badge

The Marshals don't just chase fugitives—they manage one of the largest involuntary crypto portfolios on the planet. Every seizure from dark web busts or enforcement actions adds to their treasury. Their trading decisions don't happen in a vacuum; they ripple through exchanges and investor sentiment overnight.

Market Mechanics in Motion

When government wallets move, algorithms twitch. Large-scale disposals can temporarily depress prices, creating buying opportunities for whales while retail traders panic-sell. The timing often feels suspiciously perfect—right before regulatory announcements or during liquidity crunches. Classic Wall Street playbook, just with blockchain transparency.

Transparency vs. Strategy

Blockchain ledgers don't lie, but they also don't explain motives. Was this a routine asset liquidation? A strategic rebalancing? Or a not-so-subtle signal about crypto's role in federal reserves? The absence of an official narrative fuels more speculation than a crypto influencer's Telegram channel.

The Aftermath Equation

Every government sale tests market resilience. If Bitcoin absorbs the sell pressure without crashing, it demonstrates institutional-grade liquidity. If it stumbles, critics pounce on volatility arguments. Either way, traders now face the oldest question in finance: buy the rumor, sell the news, or just watch the circus from the sidelines?

One thing's certain—when the Marshals move Bitcoin, everyone pays attention. After all, nothing boosts crypto's legitimacy quite like the government treating it as real money. Even if they're dumping it.

Did the U.S. Marshals Service sell government BTC?

According to an Asset Liquidation Agreement obtained by Bitcoin Magazine, Samourai Wallet developers Keonne Rodriguez and William Lonergan Hill agreed to transfer 57.55353033 Bitcoins to the USMS as part of their guilty plea with the U.S. Department of Justice. 

Blockchain records show the Bitcoins were transferred from address bc1q4pntkz06z7xxvdcers09cyjqz5gf8ut4pua22r on November 3, 2025 to a Coinbase Prime address identified as 3Lz5ULL7nG7vv6nwc8kNnbjDmSnawKS3n8. This address currently shows a zero balance. 

Executive Order 14233 explicitly states that Bitcoins acquired through criminal or civil asset forfeiture proceedings should not be sold and must be contributed to the United States Strategic Bitcoin Reserve. 

The order defines such assets as “Government BTC” and specifies that agency heads “shall not sell or otherwise dispose of any Government Digital Assets.” The order has exceptions for specific circumstances that so far do not apply to the Rodriguez and Hill cases.

18 U.S. Code § 982(a)(1) requires individuals who violate laws against operating unlicensed money transmitting businesses to forfeit property involved in the offense. Legal experts have noted that neither this statute nor related forfeiture laws actually require that seized Bitcoins be converted to cash. 

Relevant statutes including 31 U.S.C. § 9705 and 28 U.S.C. § 524(c) only state where the forfeited proceeds are deposited and how they may be used.

Did the Southern District of New York ignore existing regulation?

On April 7, 2025, Deputy Attorney General Todd Blanche issued a memo titled “Ending Regulation By Prosecution” which prohibits the Department of Justice from going after VIRTUAL currency exchanges, mixing and tumbling services, and offline wallets for the actions of their end users. 

Despite this clear regulation, the Southern District of New York (SDNY) continued pursuing both the Samourai Wallet case and the prosecution of Tornado Cash developer Roman Storm.

The prosecution moved forward even after the defense team learned through a Brady request that two high-ranking members of the Treasury Department’s Financial Crimes Enforcement Network had “strongly suggested” that Samourai Wallet wasn’t functioning as a money transmitter. 

Federal court statistics show that over 90% of criminal defendants are convicted and sentenced, with acquittal rates as low as 0.4% in some years. 

The SDNY prosecution has a reputation for an even higher conviction rate. Keonne Rodriguez reportedly told reporters that he was aware of these statistics and of the reputation of Judge Denise Cote, who presided over his case, for harsh sentencing when he pleaded guilty to conspiracy to operate an unlicensed money transmitter business.

Many Bitcoin and crypto leaders who supported Trump’s 2024 reelection campaign are now questioning President Trump’s promised end to the “war on crypto.”

Join Bybit now and claim a $50 bonus in minutes