#BTC

A Fifteen-Year US Hunt for Bitcoin: From Silk Road to the World's Largest Government Holder

As of February 2026, the US government holds approximately 328,372 Bitcoins, accounting for about 1.64% of the total circulating supply worldwide (roughly 19.9 million). Based on current market prices, this is valued at over $20 billion. With this scale, the US has become the largest holder of Bitcoin globally, far surpassing other governments.

Almost all of these Bitcoins originate from law enforcement seizures, not from fiscal allocations or market purchases. While hunting for illegal uses of Bitcoin, the US quietly transformed "criminal assets" into a strategic national reserve.

Over the past decade, US law enforcement and regulatory actions around cryptocurrencies—from cracking down on dark web markets to on-chain tracking and cross-border cooperation—show that the US has never truly intended to "eliminate" Bitcoin. Instead, it aims to control its flow and use, incorporating it into a national strategic reserve, forming a closed loop of technological, legal, and asset integration.

Timeline: Landmark US Actions in Bitcoin Hunting

2011-2013: The Silk Road Era

In 2011, 26-year-old American Ross William Ulbricht created "Silk Road" on the Tor anonymous network. The platform used Bitcoin as the sole payment method for illegal goods such as drugs, weapons, and fake IDs. At its peak, its trading volume once accounted for over 20% of Bitcoin's daily trading volume at the time.

In October 2013, the FBI arrested Ulbricht at a San Francisco library, locating the server and controlling the wallet. Law enforcement used a combination of server infiltration, on-chain tracking, and offline raids—tracking CAPTCHA clues to an Icelandic server, then directly seizing the wallet files from Ulbricht's laptop without cracking the private keys.

Approximately 170,000 Bitcoins were confiscated, about 144,000 of which were from Ulbricht's personal control addresses. At that time, worth just over $30 million. In 2015, Ulbricht was sentenced to life imprisonment.

This operation was not just law enforcement but also a narrative-shaping event—permanently cementing the label "Bitcoin = tool for crime" in the public eye, providing the legitimacy for subsequent regulation.

2013-2014: Multiple Dark Web Market Hunts and Regulatory Framework Foundations

After Silk Road's fall, the US did not stop.

On March 18, 2013, FinCEN issued guidance classifying Bitcoin exchanges as "Money Services Businesses" (MSBs), requiring registration and KYC/AML compliance. This marked the true start of US Bitcoin regulation, forcing exchanges to comply.

In November 2014, the FBI and 17 law enforcement agencies from European countries launched Operation Onymous, shutting down over 400 Tor dark web markets, including Silk Road 2.0, Cloud 9, Hydra, and others involved in drugs, counterfeit currency, and money laundering. Over 17 operators were arrested, including the Silk Road 2.0 operator Blake Benthall, a San Francisco software developer; about $1 million in Bitcoin, €180,000 in cash, gold, and drugs were seized.

A key tool in this phase was the "civil asset forfeiture" system, which allows freezing assets with probable cause without criminal conviction. The US Marshals began regularly auctioning off seized Bitcoins. In 2014, investor Tim Draper participated in an auction, becoming one of the early public buyers.

The dual approach of hunting and compliance pulled Bitcoin out of the underground world into a regulated order.

2017-2018: ICO Bubble Burst and Securities Regulation

Following the global ICO boom, US regulators began systematic cleanup.

The SEC classified many ICOs as "unregistered securities," initiating enforcement actions against project teams; the CFTC confirmed Bitcoin as a "commodity," bringing it under its regulatory scope.

Fines, asset freezes, and lawsuits followed. Centralized projects were forced to comply, reshaping industry funding models. While decentralized projects gained space, compliance costs increased significantly.

2020: Silk Road Aftermath

In 2020, the Department of Justice announced the seizure of about 69,370 Bitcoins, worth over $1 billion at the time, originating from the Silk Road hacking incident in 2012-2013.

This operation spanned seven years. Law enforcement used on-chain analysis tools like Chainalysis and TRM Labs, employing clustering and transaction pattern matching to trace cold wallet flows, completing civil forfeiture without private keys.

2021: The Second Largest Crypto Seizure - James Zhong Case

IRS Criminal Investigation (IRS-CI) raided a residence in Georgia, finding hardware wallets in a floor safe and popcorn buckets.

Back in Silk Road's early days, Zhong exploited a "lightning withdrawal" bug with fake merchant accounts, stealing about 50,000 Bitcoins over a few days. When arrested in 2021, authorities seized 50,676 Bitcoins, worth approximately $3.36 billion.

Despite Bitcoin's decentralized design, operational security lapses can lead to arrest. IRS used physical searches, on-chain intelligence, and plea agreements to seize assets. Zhong pleaded guilty and was sentenced to just over a year in prison.

2023-2025: CZ and Binance Case

In November 2023, Binance admitted to inadequate AML measures, allowing sanctioned users to trade, paying a $4.35 billion fine, including $2.7 billion in recovered illicit proceeds; founder CZ pleaded guilty, fined $50 million.

During the investigation, US law enforcement relied not only on on-chain fund monitoring but also obtained internal communications, reconstructing management's awareness of compliance risks—such as using encrypted messaging apps for sensitive info and deliberately downplaying "US user" identifiers in internal discussions—evidence of long-term evasion of KYC obligations.

In April 2024, CZ was sentenced to four months in prison and completed his sentence. In October 2025, President Trump announced a pardon.

2025: Strategic Shift and Largest Seizure in History

If the previous decade's actions were about hunting and rectification, 2025 marked a strategic turning point.

On March 6, 2025, Trump signed an executive order establishing the Strategic Bitcoin Reserve and the US Digital Asset Reserve, whereby all previously seized Bitcoins would no longer be auctioned but transferred into long-term national reserves, not to be sold.

This policy shift redefined the approach from "post-seizure liquidation" to "cost-free strategic holding."

In the same year, on October 14, the US Department of Justice filed criminal charges against Chen Zhiping, founder of the Cambodian Prince Group, including conspiracy to commit telecom fraud and money laundering, and civilly seized about 127,271 Bitcoins, worth roughly $15 billion at the time, setting the largest virtual asset seizure record in US history.

US authorities claimed these assets were linked to cross-border telecom fraud and money laundering, and they entered government custody; China’s National Computer Virus Emergency Response Center released a technical tracing report indicating that a large-scale Bitcoin theft from LuBian mining pool in 2020 closely matched the seized amount, raising questions about the methods used.

This event was not only an unprecedented virtual asset seizure but also a landmark case of the interplay between law enforcement authority, technical capability, and narrative control in the digital asset domain.

Meanwhile, Russia’s Garantex exchange and its successor Grinex were accused of providing money laundering channels for sanctioned countries, hackers, and scams, facing ongoing sanctions and infrastructure strikes. On-chain tracking, dollar settlement pressure, and physical server control demonstrated systemic cross-border enforcement capabilities.

After being sanctioned in early 2022, by March 2025, US authorities, including the Secret Service, seized Garantex’s domain names and froze assets worth about $26 million; the Department of Justice prosecuted several executives, including Aleksej Bessciokov, who was arrested in India; in August, OFAC expanded sanctions further, offering up to $5 million rewards for related fugitives.

Thus, the US’s approach to digital assets has formed a complete closed loop—combining enforcement, freezing, and confiscation with long-term holding and inclusion in national reserves. From technological suppression to asset integration, Bitcoin has been incorporated into the national strategic framework.

From Hunt to Nationalization

The US’s handling of Bitcoin has shifted from "fighting crime tools" to "incorporating into national strategic assets."

It’s not just law enforcement and regulation; through high-level coordination of technology, law, and strategic reserves, the US has achieved comprehensive control over the entire Bitcoin chain and aligned it with national interests.

Leveraging leading global on-chain tracking technology, national cyberattack capabilities, and international cooperation, the US has built a "technological advantage—regulatory binding—institutional enforcement" closed loop, making Bitcoin a key part of its financial resilience and international dominance.

1. Technical Level

The US relies on top-tier global on-chain tracking, national cyberattack capabilities, and cross-border cooperation to precisely control Bitcoin’s entire chain.

On-chain tracking: The US dominates the market with advanced tracing tech, with companies like Chainalysis and Elliptic holding over 90% market share, capable of clustering over 99% of Bitcoin transactions. Even with CoinJoin or mixers, address linkages often reveal themselves through on/off-ramp points.

Physical and legal integration: No need to crack private keys—search warrants and court orders directly seize hardware wallets, exchange accounts, or cloud storage files. In the Zhong case, 25 cold wallet addresses were precisely identified; in the Bitfinex case, private keys were obtained from cloud storage for direct asset control.

National cyberattack capabilities: The US targets global exchanges and mining pools with directed attacks, including backdoors, spear-phishing, supply chain infiltration, and exploiting underlying cryptographic vulnerabilities. The LuBian pool case used weak pseudo-random number generation to transfer over 127,000 Bitcoins within two hours, demonstrating technical dominance.

International cooperation and long-arm jurisdiction: Sharing intelligence with the EU, UK, and others; OFAC sanctions against Tornado Cash, Garantex; combined with dollar settlement dominance, domain seizures, and cross-border arrests—forming a global hunt network and full-chain control.

2. Legal and Institutional Framework

The US integrates Bitcoin into its national control system through laws and technical cooperation, ensuring a solid foundation for strategic reserves.

The GENIUS Act: Requires stablecoin issuers to purchase over 80% of reserves in US Treasuries, creating sustained demand for US debt and binding the crypto ecosystem to the dollar system.

The BITCOIN Act: Establishes the linkage of virtual assets with the US financial system, clarifies civil forfeiture mechanisms, and provides legal support for transferring assets into government custody.

Civil forfeiture: Assets can be seized without criminal conviction, enabling high efficiency. From 2022 to 2025, the US seized virtual assets worth over $30 billion globally, with Zhong’s case alone accounting for 50%.

This legal-technical synergy forms a complete "rule-setting—technical evidence—asset harvesting" closed loop, securing the institutional basis for strategic reserves.

3. Strategic Reserve Approach

The US’s Bitcoin operations reflect a full evolution from targeted hunting to systematic harvesting and finally to inclusion in national reserves.

Through high-level coordination of technology, regulation, and international cooperation, the US has established comprehensive control over the global virtual asset chain. Its methods include: on-chain tracking and national cyberattack capabilities for precise monitoring; court orders and civil forfeiture for direct asset transfer; and cooperation with allies, OFAC sanctions, domain seizures, and cross-border enforcement to form a global hunt loop.

Case studies demonstrate the high efficiency of this approach: assets seized in Zhong’s case are directly incorporated into national control; in CZ’s case, through rule-setting and technical tracking, the US quickly converted cross-border assets into strategic reserves. This strategy allows the US to incorporate seized assets into its reserves without market purchases, using Bitcoin as "digital gold" to hedge inflation and dollar fluctuations.

By February 2026, the US holds about 328,372 Bitcoins, representing 1.64% of the global supply, valued at over $20 billion, almost entirely from seizure operations.

On March 6, 2025, the US signed an executive order establishing the Strategic Bitcoin Reserve and the US Digital Asset Reserve, officially positioning Bitcoin as a strategic reserve asset, requiring the Treasury to cease auctions and sales of seized Bitcoin, transferring them into a newly established strategic reserve account.

Although the BITCOIN Act once proposed purchasing 1 million Bitcoins within five years, it has not yet been implemented; the executive order only authorizes a "budget-neutral, no additional taxpayer cost" potential strategy. Public market purchases have not been executed, nor has there been a clear commitment.

Overall, the US’s strategic system is highly organized—neither fully eliminating nor completely laissez-faire—achieving precise control and strategic utilization of Bitcoin.

From the Silk Road era of crime tools to the core assets of national strategic reserves, Bitcoin’s evolution reflects a new pattern of digital-era state-level technological hegemony, reinforcing US dominance in the global digital financial system, with profound implications for technological sovereignty, economic interests, and political security.