BitGo Will Custody Crypto for US Marshals Service in $4.5M Deal

The custodian will manage potentially tens of millions of dollars in seized cryptocurrencies, according to documents published Wednesday.

Apr 22, 2021 at 3:13 p.m. UTC
Updated Sep 14, 2021 at 12:45 p.m. UTC

Crypto custodian BitGo is set to manage the U.S. Marshals Service’s (USMS) trove of tainted bitcoin under a $4.5 million contract revealed in public documents Wednesday.

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.

The Festival for the Decentralized World
Thursday - Sunday, June 9-12, 2022
Austin, Texas
Save a Seat Now

DISCLOSURE

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

Trending

1
Argo Blockchain Q1 Net Income Plunges 90% to $2.1M

Bitcoin was priced in the $40,000 range for much of Q1 compared with nearly $60,000 in the same period a year earlier.

Bitcoin was priced in the $40,000 range for much of Q1 compared with nearly $60,000 in the same period a year earlier.

2
Nearly 5,505 Ether, or $10M of the $625M Ronin Exploit, Are on the Move

Over 5,505 ether connected to the Ronin exploiter address seem to be on the move via privacy exchange Tornado Cash, blockchain data shows.

Over 5,505 ether connected to the Ronin exploiter address seem to be on the move via privacy exchange Tornado Cash, blockchain data shows.

3
First Mover Asia: USDC Hasn’t ‘Flippened’ USDT, but Trader Preferences Are Changing; Cryptos Rise Despite Bearishness

A Glassnode analyst suggests the collapse of the UST token has triggered a change in investors' stablecoin preferences; bitcoin holds above $30,000.

A Glassnode analyst suggests the collapse of the UST token has triggered a change in investors' stablecoin preferences; bitcoin holds above $30,000.

4
Musk Sets New Condition for Twitter, Citi Says Terra’s Fallout Unlikely to Hit Wider Financial System

The most valuable crypto stories for Tuesday, May 17, 2022.

The most valuable crypto stories for Tuesday, May 17, 2022.