Crypto funds seized by the government may go into a ‘digital Fort Knox’

President Donald Trump has signed an executive order to establish a Bitcoin reserve held by the US government. The reserve, which crypto czar David Sacks has likened to a “digital Fort Knox,” will include the assets the government collected as part of criminal or civil forfeitures – currently estimated at around 200,000 Bitcoin.

Along with Bitcoin, the executive order requires the Secretary of the Treasury to establish a stockpile for other digital assets. It will also allow the government to explore ways to acquire more Bitcoin as long as it doesn’t “impose incremental costs on United States taxpayers,” presumably meaning the US shouldn’t use taxpayer dollars to buy up Bitcoin.

In a statement posted to X, Sacks said the US won’t sell any of the Bitcoin in the reserve. “It will be kept as a store of value,” Sacks wrote. “Premature sales of bitcoin have already cost U.S. taxpayers over $17 billion in lost value. Now the federal government will have a strategy to maximize the value of its holdings.”

As is the case with other cryptocurrencies and investments, Bitcoin is volatile. Its price has fluctuated greatly over the years, with the currency dipping below $25,000 in June 2022 amidst a broader crypto collapse. Bitcoin sits at $86,000 at this time of writing.  

However, a large chunk of the US government’s reserve includes Bitcoin seized from Ilya “Dutch” Lichtenstein and his wife Heather Morgan (aka Razzlekkan) who stole a total of 120,000 Bitcoin from the Bitfinex exchange in 2016.

During an interview on CNBC, Treasury Secretary Scott Bessent said seized assets would go into the reserve “after the victims are paid.” But we still don’t know whether the government will compensate victims with the actual Bitcoin they owned at the time of theft, or the cash equivalent of the assets at that time, the value of which would be much lower.