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Prepare For Impact: US Government Will Dump $130 Million Worth Of Bitcoin

The US government has revealed its plans to offload a significant portion of its Bitcoin (BTC) holdings. This move has raised concerns in the crypto community, considering how much selling pressure this could add to what the crypto market is already facing.  

US Government To Sell $130 Million Worth Of Bitcoin

The Department of Justice (DOJ) gave notice of its intent to dispose of over $130 million worth of Bitcoin. These crypto assets form part of what had been forfeited to the government in its case against Joseph Farace. The DOJ specifically noted that it had seized almost 2875 BTC from Farace and Sean Bridges and an additional 58.7 BTC from Farace alone. 

Farace, also known as the Xanaxman, had ties to the Silk Road as he pled guilty to manufacturing and distributing alprazolam on the dark web marketplace. The Bitcoin confiscated from him forms a portion of the over 69,369 BTC, which the US government is believed to have recovered as proceeds from Silk Road. 

Related Reading: Bitcoin Whales Go On Buying Spree As Price Dips, Here’s How Much They Bought

A sale of such magnitude is concerning as it could have a notable impact on Bitcoin’s price and the broader crypto market. Moreover, it comes at a time when the market is already under significant selling pressure from whales like Grayscale, Celsius, and FTX. However, it is worth noting that this proposed sale by the government might not happen anytime soon. 

In the notice, the DOJ also announced that any other person aside from the defendant claiming an interest in the forfeited property had 60 days to come forward with its claims. As such, it is more than likely that the sale will not occur until the expiration of the 60-day period, which doesn’t lapse until sometime in March. 

Bitcoin price chart from Tradingview.com

Selling Pressure Might Soon Cool Off

The daily outflows that Grayscale’s GBTC has faced recently suggest that the Bitcoin selling pressure might soon cool off. The Spot Bitcoin ETF has seen lower outflows since Bloomberg analyst James Seyffart reported that the fund saw $640 million flow out on January 22, its largest yet. 

Since then, GBTC is said to have seen outflows of $515 million, $429 million, and $394 million on January 23, 24, and 25, respectively. If this turns out to be a trend, then the investment fund is expected to stop bleeding soon enough. That also spells good news for the crypto market as Grayscale will cool off on offloading large sums of Bitcoin daily. 

At the time of writing, Bitcoin is trading just a little above $40,000, up in the last 24 hours, according to data from CoinMarketCap. 

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Bitcoin Vulnerability Discovered By A Developer Has Been Flagged By The US Government

 

Last week, a Bitcoin developer Luke Dashjr raised alarm about a possible vulnerability in the network in relation to the Bitcoin Ordinals that could lead to a code exploit. After posting his findings to social media, Dashjr’s warnings were not taken seriously as community members believed it was a non-issue. However, the US government seems to be taking the vulnerability seriously, adding it to its vulnerability database.

Dashjr’s Finds Vulnerability In Bitcoin Network

Dashjr had first raised alarm about the bug in the Bitcoin network on December 6 through an X (formerly Twitter) post. As the developer explains, this bug was related to the BTC Inscriptions which have gained popularity in the last year. This capability has helped developers to create what could be referred to as Bitcoin’s version of non-fungible tokens (NFTs).

Elaborating on the mechanism of Ordinals, Dashjr explained that the Inscriptions were actually taking advantage of a vulnerability in the Bitcoin Core. Developers are able to hide their data as program code, thereby being able to bypass the preset limit on the size of extra data that can be included in BTC transactions.

Dashjr explained that he was working to fix this issue. However, the vulnerability remains as developers are still able to create inscriptions on the network. Even after being fixed in the “Bitcoin Knots v25.1,” the developer explains that the vulnerability still remains “in the upcoming v26 release.” As for when the vulnerability might be completely fixed, Dashjr said he hopes this will happen sometime in 2024.

As Bitcoinist reported, not everyone in the community agreed that this was actually a vulnerability. Some worried that if the ‘vulnerability’ is eventually fixed, Ordinals and BRC-20 tokens would disappear, to which Dashjr responded in the affirmative.

Bitcoin price chart from Tradingview.com

NIST Adds BTC Bug To Vulnerability List

Despite the Bitcoin community not taking the warning of the vulnerability seriously, the United States government has chosen a more proactive approach. The National Vulnerability Database which is under the government agency, the National Institute of Standards and Technology (NIST), has moved forward to add the vulnerability to its Vulnerability List under ‘Common Vulnerabilities and Exposures.’

The agency has assigned the vulnerability with the code CVE-2023-50428 after identifying that it could be a potential risk for the network, especially when it comes to security or integrity. This means the agency believes this could lead to an exploit in the Bitcoin network.

The very existence of Ordinals and BRC-20 tokens is already identified as one of the ways that this vulnerability is already being exploited. Naturally, the agency is looking to prevent other ways in which the vulnerability could be further exploited in a way that could cause harm to its users.