The federal law enforcement agency had been looking for help handling forfeited crypto for just short of a year. It requested a full-service partner to oversee everything from private key management to bookkeeping in an April 2020 notice linked to BitGo’s new award.
It was not immediately clear how deep BitGo’s new government deal runs, or how long it will last. The company did not initially provide comment to CoinDesk. USMS did not immediately respond.
But if the USMS past dealings are any indication, BitGo could be poised to handle tens of millions of dollars in the dirtiest (and, once it is offloaded by the government, paradoxically the cleanest) bitcoin around. The service occasionally auctions off seven-figure troves of crypto seized and forfeited in criminal proceedings.
It gets those coins straight from the Justice Department. When agents discover crypto in the course of a criminal investigation, they seize it and seek forfeiture through the courts, who generally agree. Much of the crypto then flows down to USMS for storage. The agency said it averaged 62,000 seized coins annually between 2017 and 2020.
USMS will now pay BitGo to handle its bitcoin, litecoin, ethereum and other cryptos. Contract documents list management, custody, storage, bookkeeping and disposal as required duties. In contract documents it estimated needing help in “disposing” upwards of $50 million in crypto a year.
Buying straight from the feds appeals to a certain well-heeled crowd. Crypto venture capitalist Tim Draper made his bitcoin fortune by winning the USMS’ auction of 30,000 Silk Road-linked bitcoins in 2014.
BitGo is said to be in advanced acquisition talks with Galaxy Digital, CoinDesk reported earlier this week.