It’s Not Germany Selling Bitcoin. It’s One of Its States and It Has No Choice.

Saxony, a region located in eastern Germany, is the entity responsible for selling the cryptocurrency, rather than Germany as a whole.

Despite cryptocurrency enthusiasts criticizing Saxony’s decision to sell a large amount of bitcoin, the entity was left with no other option.

This year, the Criminal Police Office in the state, referred to as LKA in German, confiscated approximately 49,857 bitcoins, equivalent to nearly $3 billion at present values, from the administrator of Movie2k.to – a site found culpable of money laundering and other unlawful actions by the authorities in Saxony.

Approximately a week ago, the German Federal Criminal Police Office (BKA)’s crypto wallet began transferring large quantities of Bitcoin to exchanges such as Kraken, Coinbase, and Bitstamp, indicating an intention to sell these Bitcoins. The wallet’s Bitcoin holdings have since decreased to 23,788.

Reactions on social media have been harsh.

“Selling all of Germany’s Bitcoin holdings would be an unwise decision, perhaps even among the most foolish actions taken by their politicians.”

“Germany’s govt officials are literal idiots,” another said.

An expert explained that the situation in Germany isn’t indicative of a poor investment strategy; rather, it adheres to the usual process involving assets seized during criminal probes.

“Dr. Lennard Ante, the co-founder and CEO of Blockchain Research Lab in Germany, commented on the Saxony General Prosecutor’s Office’s role in selling confiscated assets. He noted that this action was to be expected, explaining that such assets are typically liquidated within a specific timeframe as part of standard procedures, albeit on a larger scale in this instance.”

It’s likely that the wallet containing a large amount of bitcoin belongs to Germany’s Federal Criminal Police Office (BKA) rather than Saxony itself. The BKA was deeply involved in the initial investigation and possesses the necessary expertise to manage such a substantial amount of cryptocurrency. Nevertheless, it’s important to note that the BKA does not hold decision-making authority but instead operates under instructions from the German state.

In the majority of instances, a judge’s approval is required before confiscated assets can be sold or transferred, with the revenue going to the state budget. However, in this specific scenario, such authorization has not been granted. Nevertheless, states have the option to request an emergency sale if there’s a risk that the asset’s value could depreciate rapidly or if it proves challenging to keep hold of, as Ante elaborated.

“In the case of bitcoin, this could at least be argued on the grounds of volatility,” he said.

It appears that Saxony encountered insufficient market demand when attempting to offload a large amount of bitcoin, around $200 million, on Tuesday. The lack of buyers was indicated by the return of this funds from various exchanges.