The Federal State of Saxony Officially Concluded the Sale of 50,000 Bitcoins Last Week. The Price Quickly Recovered After a Slight Dip – and Saxony Has Already Missed Out on an Increase in Value of Nearly Half a Billion Euros.
They actually did it. The Attorney General of Saxony sold the 50,000 Bitcoins that fell into their laps like the child of the Virgin Mary. In the course of the sale, the Bitcoin price dropped below 50,000 euros, only to shortly thereafter rise again to more than 60,000 euros. The powerful green candle stands tall like a mighty middle finger.
In a press release on July 16, the Attorney General’s Office explained its actions. The “Saxon Central Office for the Custody and Utilization of Virtual Currencies” located within it had carried out a “market-friendly” sale of „approximately 49,858 Bitcoins“ between June 19 and July 12 in collaboration with Frankfurt Bankhaus Scheich.
From this sale, they raised 2.64 billion euros. More precisely: 2,639,683,413.92 euros, as the Attorney General’s Office detailed down to the cent. This results in a yield of 52,944 euros and three cents per Bitcoin.
It remained unclear on what legal basis the Attorney General’s Office sold the coins. Although the creators of the illegal video-sharing platform Movie2k had voluntarily handed over the Bitcoins, they would legally belong to Saxony only once the court case against Movie2k was concluded.
To sell the Bitcoins prematurely, the Attorney General’s Office activated an „emergency sale.“ This is „legally required whenever there is a risk of a significant depreciation of approximately 10 percent or more,“ which was indeed the case for the Bitcoins.
In the context of such an emergency sale, „any market speculation and any waiting for rising prices is forbidden for a prosecuting authority.“ Hence, the Attorney General’s Office sold the Bitcoins immediately through Bankhaus Scheich, “in many small tranches” over a period of about three and a half weeks. A large part was sold „market-friendly“ off-exchange, achieving a „market-compliant price“ without having “a direct influence on the Bitcoin exchange rate.”
Remarkably, the Attorney General’s Office praised the liquidity in the markets, noting it was “substantial” at all times. Even the sale of the 50,000 Bitcoins only accounted for a very small portion of the total trading volume.
The Bitcoin price in the 30-day chart according to coinmarketcap.com. Saxony sold its Bitcoins in the valley.
However, the price trend contrarily suggests that the market was not as unaffected as the Attorney General’s Office claims. The price plummeted below 50,000 euros during the sale and shortly afterward surged above 60,000 euros. Several media outlets, including Blocktrainer, are now gleefully highlighting the missed gains for Saxony. Bitcoin prices have already risen by 16.73 percent compared to the average sale price, and Saxony has missed an increase in value of around half a billion euros.
One might now question whether the procedurally compliant actions of the Attorney General’s Office in the case of such a large sum as 50,000 Bitcoins should have been subject to parliamentary or other democratic oversight. Undoubtedly, the process was disproportionately non-transparent; only the inherently transparent nature of Bitcoin transactions provided a minimum level of insight for the sovereign, that is, the public.
Additionally, one might ask whether the state needs to pay taxes on capital gains. After all, the coins were valued at only 1.96 billion euros at the time of confiscation, as the Attorney General’s Office disclosed. Since the state held them for less than a year, this gain should theoretically incur income taxes. This question is more than mere nitpicking, as part of the proceeds would flow to the federal budget through taxes.
So far, however, the 2.6 billion euros from the sale have not been recorded as „additional revenue in the state budget.“ Instead, they are considered to be held in trust until the legal proceedings are completely concluded. Whether the defendants of Movie2k could file a lawsuit in the event of acquittal, claiming that their assets have significantly depreciated in value, is unclear; given the poor prospects for such a suit, it is probably irrelevant.
What is not irrelevant, however, is that the Bitcoin story of Saxony has now hastily ended. The now secured future additional revenue of 2.6 billion euros is a handsome sum for the federal state – but 50,000 Bitcoins could have geopolitical significance and potentially elevate Saxony to a world power. This opportunity has now officially been let go by the state.