There has been a new controversy related to cryptocurrency regulation and federal policy, as well as an apparent contradiction about what authority the USMS has per Executive Order 14233 (“Covering the previously unregulated bitcoin market”). On the same day as this report, USMS announced it had seized approximately 57.55 bitcoins (valued at approximately $50 million) based on violation of federal laws pertaining to the selling, using, storing and trading of virtual currency.
It is known that the funds have in fact been moved, but the reason why has yet to be revealed. It is clear, however, that the claimed action by USMS of liquidation or transfer may either violate Executive Order 14233, by President Trump that was a landmark and placed the US government on track to developing a ‘Strategic Reserve’, or there could be another violation of the Executive Order. Both crypto activists and Congress, however, are calling for immediate action by Congress to stop the potential for a sale and liquidation of these assets.
The Samourai Wallet Forfeiture
The assets at the center of this storm originated from the high-profile prosecution of Keonne Rodriguez and William Lonergan Hill. The duo, co-founders of the privacy mixer Samourai Wallet, pleaded guilty to operating an unlicensed money-transmitting business after a lengthy legal battle.
As part of their plea agreement, the founders agreed to forfeit 57.553 BTC. A document recently brought to light—an “Asset Liquidation Agreement” signed by Assistant U.S. Attorney Cecilia Vogel on November 3, 2025—suggests the intent was indeed to liquidate these assets. When the contract was agreed to, the total amount of coins was worth more than six million three hundred thousand dollars. However, once the defendants relinquished control of the coins, where they went was subject to significant questioning by forensic investigators.
Analyzing the Blockchain Trail
After the removal of 57.553 BTC on November 3, 2025, blockchain analysts followed this money to an address related to a seizure and then quickly transferred the money into a Coinbase Prime managed wallet. The assets will then automatically be run through the standard pool address that Custodian’s internal systems manage.
This is because the original deposit address now has no data of an actual sale transaction. However, there is no definitive proof that an actual sale occurred based on the on-chain data alone. Coinbase Prime uses a vast infrastructure of omnibus wallets for storage, liquidity, and settlement. To date, the Bitcoin has not been seen leaving Coinbase’s ecosystem or fragmenting into smaller outputs typical of a trade execution. The movement is consistent with custody, but it is equally consistent with the first step of an off-chain liquidation (OTC) trade.
The Off-Chain Mystery
The ambiguity lies in the nature of institutional crypto trading. As Coinbase Prime deals with high volumes of off-chain conversion so that its trades are less impactful on the market, the actual sale has not left a trail on the public ledger. Only Coinbase’s internal logs and DOJ documentation will show that the trade occurred.
Without access to execution confirmations, analysts can only make educated guesses as to what happened. While a signed liquidation agreement is the clearest evidence of a sale, a lack of clear fragmentation on-chain may help support this assumption. Until the DOJ clarifies the condition of the asset(s) or provides additional information, it remains uncertain what happened.
A Potential Violation of Executive Order 14233
Because of the current administration’s shift towards digital assets, the political implications associated with this transaction are greater than normal. Executive Order 14233 issued by President Trump requires that the federal government will hold on to all bitcoins acquired via Federal asset forfeiture so as to build up a U.S. Strategic Bitcoin Reserve.
Legal experts note that while 18 U.S. Code § 982 governs the forfeiture of property, the Executive Order superimposes a retention requirement on crypto assets specifically. Unless the Attorney General provided a specific waiver—of which there is no public record—liquidating these coins would effectively mean the DOJ is selling “Government BTC” in contravention of the President’s directive.
The “Sovereign District” Goes Rogue?
In the wake of this incident, there has been a renewed interest in the Southern District of New York (SDNY), one of the most powerful federal courts, often referred to as the “Sovereign District” for its fierce independence. The prosecution of Samourai Wallet was already controversial when it moved through the SDNY, despite the issuance of an April 2025 memo from Deputy Attorney General Todd Blanche that indicated a pivot away from targeting noncustodial privacy tools by the DOJ on a nationwide basis.
Through its progress on this case (involving the liquidation of assets) and looking how far it can interact concerning its independence with the White House’s growing support for the industry around Crypto assets.
Political Backlash Intensifies
The reaction from Capitol Hill was swift. Senator Cynthia Lummis (R-WY), a longtime advocate for digital assets, took to X (formerly Twitter) to voice her alarm. In a sharp statement, she questioned why federal agencies would liquidate hard assets that are supposed to be part of the national reserve.
“Offloading these digital assets undermines U.S. strategic interests,” Lummis wrote, warning that other nations are actively accumulating Bitcoin while the U.S. government appears to be selling it. She urged immediate oversight hearings to determine if the Executive Order was violated.
As the dust settles, the core question remains unanswered: Did the U.S. government just sell its own Bitcoin reserve, or is this simply a custodial reshuffle?
