SDNY and DOJ Accused of Breaching Bitcoin Reserve Order
In a controversial move, the Southern District of New York (SDNY) and the Department of Justice (DOJ) are under fire for allegedly selling millions of dollars in seized Bitcoin. This action, according to critics, violates Executive Order 14233 issued by former U.S. President Donald Trump. This executive order strictly mandates that forfeited Bitcoin should remain stored in the U.S. Strategic Bitcoin Reserve, prohibiting any sale.
What Led to the Controversy?
The focus of this incident surrounds Samourai Wallet, a privacy-centric cryptocurrency service. Federal authorities seized approximately 101 Bitcoin, estimated to be worth $6.3 million, during the prosecution of Samourai Wallet’s founder, Keonne Rodriguez, and associate William Lonergan Hill. Both individuals were charged with operating an unlicensed money transmitting business and conspiracy to commit money laundering. Their platform’s privacy tools allegedly facilitated over $237 million in illegal transactions connected to dark web markets like Silk Road and Hydra.
Rodriguez and Hill eventually pleaded guilty as part of a plea deal in August 2025, agreeing to forfeit 101 Bitcoin to the government. This Bitcoin, however, was reportedly sold by the U.S. Marshals Service later that year—a move that directly contradicts the presidential order requiring the Bitcoin to remain as part of the national reserve.
Legal Repercussions and Policy Failures
The sale of seized Bitcoin has drawn fierce criticism. Blockchain activity, alongside reports from Bitcoin Magazine, confirms that the transactions were executed by the U.S. Marshals Service, the agency managing seized assets for the DOJ. Legal experts and crypto advocates argue this represents a systemic failure in adhering to federal policies.
Adding fuel to the fire, allegations of evidence suppression during the Samourai case have damaged the trust in prosecutorial processes. Defense lawyers previously accused prosecutors of withholding a FinCEN guidance document from 2021. This guidance claimed non-custodial platforms like Samourai Wallet do not fall under the category of money-transmitting businesses, raising questions about the DOJ’s handling of the case.
Community and Legal Backlash
The crypto community, led by figures like Frank Corva of Bitcoin Magazine, has voiced demands for accountability. Experts anticipate that this controversy may lead to an internal inquiry by the DOJ or possibly spark congressional oversight. Notably, a bill introduced in mid-2025, H.R. 3798, aims to solidify the president’s Executive Order into law, ensuring better protections for Bitcoin reserves in the future.
The integrity of the U.S. Strategic Bitcoin Reserve, estimated to contain around 210,000 Bitcoin from various forfeitures, is also under scrutiny. This incident raises serious concerns about the management and transparency of federal cryptocurrency assets.
Stay Updated on Cryptocurrency News
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