The German government recently made headlines for selling off all of its Bitcoin holdings in just two weeks. The reason behind this massive Bitcoin dump was revealed in a statement by the Saxony Central Office for the Protection and Realization of Virtual Currencies. The sale, which began on June 19, 2024, and concluded on July 12, 2024, involved approximately 49,858 BTC. The proceeds from the sale amounted to €2.63 billion, with the funds remaining provisionally secured for criminal proceedings related to the now-defunct movie piracy website, movie2k.
The German government’s decision to sell off its Bitcoin holdings was driven by its legal obligation to liquidate valuable assets before the conclusion of ongoing criminal proceedings. German law mandates the liquidation of seized digital assets, as was the case with the 50,000 BTC seized from the operator of movie2k in January 2024. The Dresden Public Prosecutor Office had no choice but to conduct an emergency sale of the Bitcoin stash, in adherence to Article 111p of the Code Of Criminal Procedure.
The German government took into consideration the impact of substantial Bitcoin sell-offs on the market and initiated multiple BTC dumps in small tranches over a period of three and a half weeks. This strategy was aimed at conducting a “market-friendly and appropriate sale of Bitcoins.” By selling off approximately 49,858 BTC in small tranches, the government aimed to minimize the impact on the market while still liquidating the assets in a timely manner.
One interesting aspect of the German government’s Bitcoin sale was the prohibition of speculation regarding the prices of the seized assets. In an emergency sale, authorities are not allowed to wait for the rising value of the assets or engage in any form of speculation. This is due to the volatile nature of Bitcoin and its rapid price fluctuations, which pose a risk of significant loss. Therefore, the sale had to be carried out as quickly as possible, regardless of the current value of Bitcoin or other price-influential circumstances.
Overall, the German government’s decision to sell off its Bitcoin holdings was driven by a combination of legal obligations, market considerations, and the need to avoid potential losses. The government’s approach to conducting the sale in small tranches over a period of time demonstrates a level of awareness of the market impact of such a significant sell-off. By adhering to the legal requirements and conducting a “market-friendly” sale, the German government successfully liquidated its Bitcoin holdings while minimizing disruption to the market.
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