Coinbase Bags $32 Million Contract From DOJ For Handling Confiscated Crypto

In a big development, the US Department of Justice’s asset forfeiture division, the US Marshal Service, has chosen Coinbase as its custody provider for large-cap digital assets. 

Coinbase announced the partnership in a recent blog post, highlighting the agency’s collection of Coinbase Prime to supply custody and advanced trading services for its “Class 1” digital assets managed centrally in support of federal law enforcement efforts.

Coinbase Secures Government Partnership

The US Marshal Service conducted a radical due diligence process, considering various solutions, and ultimately opted for Coinbase based on its track record and talent to securely provide institutional-grade crypto services at scale. 

The agency stated that it requires reliable storage and liquidation techniques to professionally manage and get rid of substantial quantities of popular cryptocurrency assets, generally known as Class 1 cryptocurrencies, in a way consistent with policies outlined by the Department of Justice and the US Marshal Service.

This partnership will reportedly streamline the custody, management, and disposal processes for cryptocurrency assets, allowing for diversification within the sorts of digital assets that could be handled and disposed of under the federal government’s forfeiture programs. 

Coinbase emphasized its longstanding history of supporting law enforcement agencies and its collaborations with major federal, state, and native agencies within the US, in addition to international agencies worldwide. The exchange wrote:

Today, Coinbase works with every major U.S. federal, state, and native law enforcement agency, in addition to international agencies on every continent. Growing the cryptoeconomy means promoting protected and efficient markets, and these partnerships are critical to our mission.

Regulatory Contradiction Exposed?

While Coinbase’s selection by the US Marshal Service demonstrates its ability to serve government entities, the exchange has faced regulatory scrutiny from agencies just like the US Securities and Exchange Commission (SEC). 

Despite this, the US government recently transferred over 3,940 BTC value $241 million to Coinbase, which was originally seized from drug dealer Banmeet Singh during a trial in January 2024.

Pro-crypto lawyer John E. Deaton criticized the US government’s actions, labeling them as “nonsensical.” Deaton specifically called out SEC Chairman Gary Gensler and US Senator Elizabeth Warren, noting that Gensler continues to work under Warren’s administration while supposedly joining the anti-crypto movement she had pledged to create upon her reelection announcement.

Deaton highlighted the irony of the US government utilizing Coinbase for Bitcoin transfers while the exchange itself faces accusations of alleged illegal business activities by the SEC and its chair Gary Gensler. 

Deaton identified the contradiction of Gensler, as SEC Chairman, declaring Coinbase’s business as illegal, yet the US government counting on the identical “illegal” business to sell Bitcoin to the American public.

Ultimately, the situation raises questions on the consistency and coherence of the federal government’s approach to cryptocurrencies, especially regarding Coinbase’s involvement in official transactions despite ongoing regulatory challenges. 

The incident underscores the necessity for clarity and alignment between regulatory bodies and government agencies to create a more predictable and supportive environment for the crypto industry.

The each day chart shows the overall crypto market cap’s valuation at $2.2 trillion. Source: TOTAL on TradingView.com

Featured image from DALL-E, chart from TradingView.com 

Leave a Comment

Copyright © 2024. All Rights Reserved. Finapress | Flytonic Theme by Flytonic.