Government Bitcoin Seizures: Why Self-Custody Matters Now
US government Bitcoin seizures have reached $15B, feeding a Strategic Reserve. Here's why self-custody is critical for protecting your assets.
In October 2025, the US Department of Justice seized 127,271 Bitcoin, worth approximately $15 billion, from Chen Zhi of Cambodia's Prince Group. The forfeiture, linked to forced-labor scam compounds and money laundering, marked the largest in American history. And those coins? They went straight into the government's growing stockpile.
This isn't an isolated incident. It's part of a pattern that should concern anyone holding Bitcoin on an exchange or through a custodial service.
The US Government Is Now a Major Bitcoin Holder
The numbers are striking. Estimates place US government Bitcoin holdings somewhere between 188,898 and 394,759 BTC, accumulated through criminal forfeitures over the past decade. Major seizures include 94,643 BTC from the Bitfinex hack, 69,370 BTC from Silk Road operations, and over 50,000 BTC from Silk Road hacker James Zhong in 2021.
In March 2025, President Trump established the Strategic Bitcoin Reserve via executive order, capitalizing it with roughly 200,000 seized BTC. The policy shift halted immediate liquidations of confiscated coins. Then in January 2026, Treasury Secretary Scott Bessent confirmed that all seized Bitcoin will join this reserve, treating it like gold.
The government isn't just confiscating Bitcoin; it's accumulating it as a national asset.
How Seizures Actually Happen
Here's what matters for your security: the vast majority of these seizures came through exchanges and custodial services.
When your Bitcoin sits on Coinbase, Kraken, or any exchange, it's not really yours. The exchange controls the private keys. When federal agents show up with a subpoena backed by KYC data you provided during signup, the exchange has no choice but to comply. Your account gets frozen. Your coins get transferred to government wallets.
Blockchain analytics firms like Chainalysis and Elliptic make tracing straightforward. In 2023 alone, US law enforcement seized over $3 billion in digital assets using these techniques, with the FBI, IRS-CI, and Secret Service all actively targeting illicit flows through centralized platforms.
The lesson isn't that blockchain tracing is evil. It's that leaving your Bitcoin with third parties creates a single point of failure that governments can easily exploit.
Self-Custody Changes the Equation
Self-custody means you hold the private keys. No exchange can freeze your account because you don't have an account. No subpoena can compel a third party to hand over your coins because no third party controls them.
This doesn't make you immune to law enforcement, of course. If you're engaged in criminal activity, authorities can still pursue you directly. But it does eliminate the easy path: the one where your assets get swept up in a mass seizure, frozen pending investigation, or caught in an exchange bankruptcy (remember Mt. Gox?).
Self-custody aligns with Bitcoin's fundamental nature as a bearer asset. You possess it, you control it.
What Good Self-Custody Looks Like
Not all self-custody is equal. A hot wallet on your phone is better than an exchange, but it's still vulnerable to device theft, malware, and coercion.
For serious holdings, consider a desktop wallet like Sparrow Wallet that gives you full control over your UTXOs, supports multisig arrangements, and connects to your own Bitcoin node. Sparrow's ability to coordinate signing across air-gapped hardware devices, combined with detailed transaction visualization, makes it practical for both personal treasury management and more complex custody setups. The learning curve exists, but the capabilities justify it.
For those prioritizing transaction privacy, Ashigaru offers a self-custodial approach with privacy features built in, including Whirlpool mixing, peer-to-peer coinjoins, and reusable payment codes. If you're coming from Samourai Wallet or want stronger privacy protections, it's worth evaluating.
The Counterarguments Deserve Acknowledgment
Fairness requires noting that government seizures overwhelmingly target actual criminals: money launderers, hackers, fraud operators. The Prince Group case involved forced-labor scam compounds. The Silk Road seizures came from a marketplace for illegal drugs. Most people reading this aren't running money laundering operations.
Some also argue that exchange custody is "good enough" for most users, that the convenience outweighs the risks, and that robust regulatory frameworks can protect legitimate holders.
These points have merit. But they assume governments will always act in good faith, that regulatory frameworks won't shift, and that you'll never be caught up in a broader seizure action by mistake. Recent history suggests these assumptions deserve scrutiny.
The Broader Picture
The US isn't alone. Taiwan seized 210 BTC ($18 million) in 2025. Governments worldwide are developing capabilities to identify, trace, and confiscate cryptocurrency held through centralized services.
This isn't necessarily about hiding from legitimate law enforcement. It's about recognizing that the promise of Bitcoin, financial sovereignty independent of institutional permission, only works if you actually take custody of your keys.
If your Bitcoin can be seized with a subpoena to Coinbase, you don't own Bitcoin. You own an IOU that the exchange will honor until someone with sufficient authority tells them not to.
The tools for proper self-custody exist. The knowledge is accessible. The main barrier is inertia. For anyone holding meaningful amounts of Bitcoin, the question isn't whether to move to self-custody. It's how soon you can do it properly.