Senator Lummis urges halt to Silk Road Bitcoin sale, demands FDIC accountability on crypto records

In two separate letters, Cynthia Lummis expressed concerns over how US authorities are handling matters related to crypto.

Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.

Senator Cynthia Lummis sent letters to US authorities expressing her concerns over the plans to liquidate the 69,370 Bitcoins (BTC) tied to the Silk Road and the alleged destruction of material regarding the Federal Deposit Insurance Corporation (FDIC) activities on digital assets.

In the letter addressed to Ronald L. Davis, Director of the US Marshals Services (USMS), Lummis questioned the urgency and rationale behind the planned sale and highlighted its potential long-term financial and strategic implications for the US.

She added:

“These Bitcoin represent an opportunity to diversify America’s assets and create a financial foundation that will benefit future generations. The decision to hold or sell these assets will reverberate far beyond this administration, potentially impacting our nation’s financial sovereignty and strategic position for decades to come.”

Senator Lummis also contends that the USMS’s historical handling of similar Bitcoin sales has resulted in staggering losses for taxpayers. Between 2014 and 2023, the USMS reportedly sold 195,092 BTC for $366.5 million, now worth $18.9 billion, amounting to $18.5 billion in unrealized gains.

Strategic management

Senator Lummis’ letter concerns financial losses and aligning public asset management with national interests. 

The planned liquidation appears to conflict with President-elect Donald Trump’s July 2024 proposal to establish a “National Bitcoin Stockpile,” a policy intended to retain 100% of all Bitcoin held or acquired by the US government.

Citing recent court filings, Lummis criticized the Department of Justice’s (DOJ) justification for an expedited sale based on Bitcoin’s price volatility. She emphasized that such a rushed approach undermines long-term strategic planning, especially during a presidential transition. 

Lummis’ concerns also extend to the lack of transparency and strategic foresight in handling seized BTC amounts.

FDIC whistleblowers

Meanwhile, Lummis also sent a separate pointed letter to Federal Deposit Insurance Corporation (FDIC) Chair Marty Gruenberg. The letter levied serious allegations about whistleblowers within the agency coming forward with claims of document destruction and staff intimidation related to the FDIC’s digital asset activities. 

According to Senator Lummis, whistleblowers have alleged that the FDIC is destroying materials tied to its digital asset operations while monitoring and threatening employees to prevent them from sharing information with Congress. 

She stated:

“This is illegal and unacceptable. You must ensure your staff cease and desist destruction of all materials and end all retaliatory actions immediately.”

The letter details a broad range of materials that the FDIC must preserve, from the supervision and liquidation of crypto-related banks like Signature Bank and Silvergate Bank to records of communications with other federal and state agencies on digital asset policies. 

Moreover, Senator Lummis explicitly called for the preservation of all documents containing terms like “crypto, Bitcoin, Ethereum, and digital asset.”

The directive also includes guidance on protecting metadata and electronic information, emphasizing the need to prevent alteration or destruction. Senator Lummis warned that any confirmed efforts to obstruct oversight would result in criminal referrals to the Department of Justice.

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