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

Since confiscating nearly $3 billion worth of bitcoin in January, Germany's state of Saxony has sold over half of its initial holdings, causing distress in the market.

Germany's state of Saxony has sold over half of its bitcoin (BTC) holdings, which were confiscated earlier this year. The state's Criminal Police Office (LKA) seized 49,857 bitcoin (currently valued at almost $3 billion) from the operator of Movie2k.to, a website found guilty of money laundering and other illegal activities.

The crypto wallet, which belongs to the German Federal Criminal Police Office (BKA), started moving thousands of BTC to exchanges including Kraken, Coinbase and Bitstamp about a week ago. The wallet's bitcoin holdings have since decreased to 23,788.

Reactions on social media have been largely negative.

"Germany selling all their #Bitcoin will go down as one of the most retarded things their politicians ever did," wrote one X user.

"Germany's govt officials are literal idiots," wrote another.

However, an expert has stated that the mass sale of bitcoin is not a poor investment strategy, but rather a standard procedure for assets confiscated in criminal investigations.

"The general prosecutor's office of Saxony is responsible for liquidating confiscated assets, and the sell-off is hardly surprising," said Dr. Lennart Ante, co-founder and CEO of German-based Blockchain Research Lab. "Seized assets are always liquidated within a certain period. This is a routine business process, although at a larger-than-normal scale."

Ante speculated that the reason for the wallet belonging to the BKA – and not Saxony itself – is likely because the police agency was involved in the initial investigation and had the technical expertise to handle such a large amount of bitcoin.

According to Ante, the BKA does not have decision-making power and acts solely on instructions from the state.

In most cases, confiscated assets can only be transferred or sold with the proceeds going to the state budget once a judge rules that the state is allowed to do so, which is not the case in this particular situation. However, states can request to initiate an emergency sale, which could be issued if the asset's value might quickly lose value or is difficult to store, for example.

"In the case of bitcoin, this could at least be argued on the grounds of volatility," said Ante.

There is some evidence, however, that Saxony is attempting to sell too much bitcoin at once. On Tuesday, it received $200 million back from some of the exchanges, possibly indicating that there was not enough demand to buy such a large sum.

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More about CoinDesk

Helene Braun is a New York-based reporter covering Wall Street, the rise of the spot bitcoin ETFs and crypto exchanges. She is also the co-host of CoinDesk's Markets Daily show. Helene is a graduate of New York University's business and economic reporting program and has appeared on CBS News, YahooFinance and Nasdaq TradeTalks. She holds BTC and ETH.

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