Amid a growing number of cryptocurrency-related criminal convictions, the US Marshals Service has been tasked with managing and disposing of Bitcoin and other digital assets. As with other confiscated assets, law enforcement is responsible for safekeeping cryptocurrencies through the Department of Justice's Asset Forfeiture Program, including periodically selling them at auction.
But, at least from a software perspective, keeping pace with cryptocurrencies is much harder than selling Chagall. For this reason, law enforcement has tried to bring in a private tech company for help in recent years. But despite the deal being struck with the cryptocurrency companies, at least two deals appear to have fallen through. Today, the Marshals Service still holds the exact same cryptocurrency.
“As seizures and foreclosures of cryptocurrency become commonplace, the USMS has tried to develop an agreement with the private sector, as is the case with almost all other assets,” a spokesperson said. of the Asset Forfeiture division at FedScoop. "There is currently no private company that manages the USMS cryptocurrency wallet."
The search for a contractor began several years ago when the US Marshals Service requested information from companies about the company's ability to handle cryptocurrency. In April 2021, a company called Bitgo, a California-based crypto security firm, won a $4.5 million contract.
But then BitGo lost the contract a few months after the Small Business Administration determined that the company was too big to qualify for the contract. (In May, a company called Galaxy Digital announced plans to spend $1.2 billion to acquire BitGo, though the deal later fell through.) In July, Marshall Service sued another company, Anchorage Digital, based in San Francisco, and also sued. Cryptocurrency rental. . Provide contractual services.
Now, however, the deal with Anchorage Digital also appears to have fallen through. As with the BitGo contract, the Federal Procurement Data System shows that Marshall's services contract with Anchor Labs "ended for convenience." Anchorage Digital is a subsidiary of Anchor Labs, according to its website. The company appears to have deleted a Medium post promoting the deal.
"Both awards were later suspended due to complaints filed with the US Small Business Administration (SBA) challenging the size of the companies' assets," a USMS spokesperson told FedScoop. "Ultimately, the Small Business Administration determined that the two entities are different from small businesses."
The company did not respond to a request for comment, although it should be noted that the exchange regulator issued a compliance order against the company, which has an OCC banking charter, in 2022. The Small Business Administration n did not provide a comment at the time. of publication.
"Not all cryptocurrency seized for federal confiscation is transferred to the USMS for safekeeping and liquidation," the DOJ spokesperson added. "The USMS uses the best practices and services of the private sector to manage and dispose of all assets in its custody in the most efficient and secure manner."
The USMS has struggled to deal with cryptocurrencies, as evidenced by a report released last summer by the Department of Justice's Office of the Inspector General. At the time of the report, the Marshals Service used multiple spreadsheets to manage its cryptocurrencies, primarily because digital assets like bitcoin cannot be easily tracked in a DoJ asset management program called the Unified Asset Tracking System ( CATS).
According to the Inspector General, these documents lack "inventory management controls" and "documented operating procedures". Cryptocurrency management, storage and valuation policies also provide “inadequate or insufficient, and in some cases contradictory” guidance.
“USMS supplemental spreadsheets are unable to track changes to cryptocurrency entries in USMS inventory records,” the Inspector General warned. Therefore, these inventory records can be changed or deleted without these changes being recorded and without the knowledge of the spreadsheet maintainers.
In some cases, the report adds, the Marshals service "did not fully comply" with CATS' cryptographic disclosure rules.
The Inspector General also said that Marshals should develop more cryptographic policies before working with a private company, warning that "without properly documented policies and procedures, the USMS does not have an adequate basis to define security requirements. performance for a contract to "create a cryptocurrency service".