US Gov Seeks Forefeiture of $2.4 Million in Bitcoin Linked to Ransomware Group for Strategic Bitcoin Reserve

The United States Department of Justice (DoJ) filed a civil complaint to take ownership of nearly $2.4 million in Bitcoin seized from a member of the newly identified ransomware group, Chaos. The funds were described by the agency as the alleged proceeds of money laundering and ransomware attacks.

According to a statement from the DoJ, the United States Attorney’s Office for the Northern District of Texas filed a civil complaint last week calling for the forfeiture of 20.2 BTC that was seized from an address linked to the hacker group.

DOJ Wants to Forfeit 20 BTC Tied to Chaos Hacker Group for the US Strategic Bitcoin Reserve

The Bitcoins were seized by the Dallas, Texas, division of the Federal Bureau of Investigation (FBI) in mid-April from a Chaos member called “Hors”. The Texas US Attorney’s Office said in a statement that Hors has been linked to several attacks carried out by the ransomware group, including against state residents.

The FBI seized the assets using a recovery seed phrase from Electrum, a Bitcoin wallet, and they are currently being held in a wallet controlled by the agency. The DOJ did not provide much detail on how the funds are linked to criminal activity, stating that it is “under seal as a highly sensitive document”.

Chaos is a relatively new hacking group that emerged in February 2025. According to cybersecurity firm Cisco Talos, the group’s pattern involves encrypting data on a victim’s computer and then demanding a ransom payment while threatening to disclose confidential information that they have collected.

It is classified as a ransomware-as-a-service group, offering cross-platform malware that is purportedly compatible with Windows, ESXi, Linux, and NAS operating systems. Oftentimes, ransomware attackers use a software program called Chaos, but Cisco Talos does not believe it is linked to the group in question, and they are likely using this as a decoy to hide their members’ identities.

The assets, pending litigation, could be added to the US Strategic Bitcoin Reserve, which President Donald Trump proposed in a March executive order. The reserve would stockpile BTC seized through criminal or civil asset forfeiture, rather than purchasing it with taxpayer funds. Instead of selling confiscated Bitcoin at auction, which used to be the practice, the government would retain it in a central reserve account. The executive order explicitly states that any Bitcoin deposited in the digital Fort Knox “shall not be sold”.

The plan does not include direct federal Bitcoin purchases but allows for “budget-neutral” methods to expand the reserves, which is where the seized assets come in.

US Government Holds 198K BTC in Multiple Wallets Handled by Federal Agencies

Blockchain intelligence firms Nansen, Arkham, and BitcoinTreasuries have estimated that the federal government holds around 198,012 BTC, which were seized as part of criminal proceeds over the years. However, a recent civilian request has called that number into question.

X user “L0la L33tz”, an independent journalist, said that they made a freedom of information request in March to the DoJ regarding the government’s Bitcoin holdings and received a response on July 16, which revealed that the US Marshals Service (USMS) only hold slightly more than 28,988 BTC, a far cry from the $23.5 billion worth of coins as claimed earlier.

In a subsequent post, L0la L33tz clarified that the figure shared did not take into account the assets under the account of other US seizing agencies, like the Drug Enforcement Agency (DEA) or the FBI, meaning there are multiple federal custody offices. They also noted that the estimates provided by trackers are likely wrong, as they don’t seem to differentiate between seized and forfeited Bitcoins, because in some cases their status is “still up in the air”.

On July 23, Arkham Intelligence pointed out that other departments of the US government also seize and hold Bitcoin, including the FBI, DoJ, DEA, and US Attorney’s Offices. The firm reiterated that the US government holds at least 198,000 coins across multiple addresses that are held by different federal agencies, and none of them have moved the assets in 120 days.

Federal Government Cleared to Sell 69,370 BTC Linked to Silk Road, but the Assets Could be Moved to the SBR

In early January, the DoJ received approval from the Northern District Court of California to liquidate 69,370 BTC tied to the infamous darkweb marketplace Silk Road. This lot is considered the largest-ever federal crypto seizure to date. Chief US District Judge Richard Seeborg denied a motion to block the forfeiture of the assets that are worth $8.2 billion today, but the ruling does not guarantee immediate liquidation since federal asset forfeiture involves multiple administrative steps and potential appeal windows.

However, portions of this Silk Road haul have already been sold by the government, with the most recent sale happening on December 3, 2024, when nearly $2 billion in Bitcoin was moved to the Coinbase exchange. The USMS has a custody arrangement with Coinbase Prime to manage seized crypto assets.

Meanwhile, at least 30 US states have introduced legislation to establish a Bitcoin strategic reserve, but so far, only Arizona, Texas, and New Hampshire have passed it into law. Most of these proposals have been voted down by lawmakers before they made it past the first committee phase.

At the time of writing, Bitcoin (BTC) is trading at $118,624, down 0.22% in the last 24 hours.