In a significant development, the U.S. Department of Justice’s asset forfeiture division, the U.S. Marshal Service, has selected Coinbase as its custodian for large-cap digital assets.
Coinbase recently announced the partnership blog posthighlighting the agency’s selection of Coinbase Prime to provide custody and advanced trading services for its “Class 1” digital assets, which are centrally managed to support federal law enforcement efforts.
Coinbase Partners with Government
The US Marshal Service conducted a thorough due diligence process, considering several solutions, and ultimately selected Coinbase based on its track record and ability to securely provide institutional-grade crypto services on scale.
The agency mention that reliable storage and liquidation techniques are needed to professionally manage and dispose of substantial amounts of popular cryptocurrencies, known as Class 1 cryptocurrencies, in a manner consistent with policies set forth by the Department of Justice and the U.S. Marshal Service.
According to reports, this partnership will streamline the custody, management, and disposal processes of cryptocurrency assets, allowing for greater diversification in the types of digital assets that can be processed and disposed of through government forfeiture programs.
Coinbase highlighted its long history of supporting law enforcement agencies and its partnership with major federal, state, and local agencies in the U.S., as well as international agencies worldwide. The stock exchange wrote:
Today, Coinbase partners with every major U.S. federal, state, and local law enforcement agency, as well as international agencies on every continent. Growing the crypto economy means promoting safe and efficient markets, and these partnerships are critical to our mission.
Has the contradiction in the regulations been exposed?
While Coinbase’s selection by the US Marshal Service demonstrates its ability to serve government agencies, the exchange faces regulatory oversight from agencies such as the US Securities and Exchange Commission (SEC).
Despite this, the US government has recently transferred more than 3,940 BTC worth $241 million to Coinbase, originally seized from drug dealer Banmeet Singh during a court case in January 2024.
Pro-crypto attorney John E. Deaton criticized the U.S. government’s actions, calling them “nonsense.” Deaton specifically named SEC Chairman Gary Gensler and U.S. Senator Elizabeth Warren, noting that Gensler still works under Warren’s administration while reportedly joining the anti-crypto movement she promised to create in her re-election announcement.
Deaton emphasized the irony that the US government is using Coinbase for Bitcoin Transfers while the exchange itself faces allegations of alleged wrongdoing by the SEC and its chairman Gary Gensler.
Deaton pointed out the contradiction in that Gensler, as chairman of the SEC, declared Coinbase’s activities illegal, while the U.S. government relied on the same “illegal” activities to sell Bitcoin to the American public.
Ultimately, the situation raises questions about the consistency and coherence of the government’s approach. cryptocurrencyparticularly regarding Coinbase’s involvement in official transactions despite ongoing regulatory challenges.
The incident underscores the need for clarity and alignment between regulators and government agencies to create a more predictable and supportive environment for the crypto industry.
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