- The US Marshals Service has selected Coinbase Prime to manage custody and trading services for large-cap digital assets
- Coinbase Prime has been tasked with holding and disposing of digital assets seized through federal law enforcement
- This five-year deal has come amid ongoing legal tussles between the SEC and Coinbase over cryptocurrency definitions
The US Marshals Service (USMS), a division of the US Department of Justice responsible for asset forfeiture, yesterday announced its selection of Coinbase Prime to manage custody and advanced trading services for its “Class 1” large-cap digital assets. This means that Coinbase Prime will be charged with holding and disposing of digital assets seized through federal law enforcement activities throughout the US, something it has already been doing for US institutions. The five-year deal comes at a time when the Securities and Exchange Commission (SEC) is still involved in legal tussles with the exchange over the definition of cryptocurrencies.
Ten Years of Bitcoin Auctions
The USMS has been involved in the seizure of crypto assets since the Silk Road case in 2013, but with the growth of the sector has come a growth in its misuse, resulting in tens of billions of dollars in cryptocurrencies being seized on an almost annual basis. It’s no surprise, therefore, that the agency has sought the expertise of one company to handle the custody and sale for them.
In June 2014, the USMS conducted its first major Bitcoin auction, selling off 29,656 bitcoins that had been confiscated from Silk Road and founder Ross Ulbricht. At the time, these coins were valued at approximately $18 million, with venture capitalist Tim Draper famously emerging as the winner of this auction. These coins are now worth $1.8 billion.
Following the initial sale, the USMS held a second auction in December 2014, this time auctioning 50,000 Bitcoins also seized from the Silk Road, with a third taking place three months later for another 50,000.
Coinbase Becomes Third Provider
The USMS has always used third parties to custody their coins, with BitGo being the first company to be awarded the license prior to the 2014 auctions. BitGo continued to be the chosen provider until 2021 when Anchorage was handed the task.
The baton has now passed to Coinbase Prime, with the company noting in a press release its “longstanding history of supporting law enforcement agencies, dating back to the founding of our law enforcement program in 2014,” adding that it “works with every major U.S. federal, state, and local law enforcement agency, as well as international agencies on every continent.”
The company added that it has rapidly become the preferred platform for institutions and large digital asset holders since its launch nearly three years ago, as evidenced by the fact that it is the primary partner for the majority of spot crypto ETFs.
Adding a layer of irony to this announcement is the ongoing legal battle between the SEC and Coinbase over the definition of cryptocurrencies as securities. This juxtaposition highlights the complex regulatory landscape that digital asset platforms navigate while maintaining essential partnerships with law enforcement.
