In a significant development, the US Department of Justice’s asset forfeiture division, the US Marshal Service, has selected Coinbase as its custody provider for large-cap digital assets.
Coinbase announced the partnership in a recent blog posthighlighting the agency’s selection of Coinbase Prime to offer advanced custody and trading services for its centrally managed “Class 1” digital assets in support of federal law enforcement efforts.
Coinbase Secures Government Partnership
The U.S. Marshal Service conducted an extensive due diligence process, considering various alternatives, and ultimately selected Coinbase based on its track record and ability to securely provide institutional-grade services. cryptography services At scale.
The agency declared that reliable storage and liquidation techniques are required to professionally manage and dispose of significant amounts of popular crypto assets, known as Class 1 cryptocurrencies, in a manner consistent with policies outlined by the Department of Justice and the U.S. Marshal Service.
This partnership is expected to streamline the processes for custody, management and disposal of cryptocurrency assets, enabling diversification of the types of digital assets that can be processed and disposed of under government forfeiture programs.
Coinbase highlighted its long history of supporting law enforcement and its collaborations with major federal, state and local agencies in the United States, as well as international agencies worldwide. The exchange wrote:
Today, Coinbase works with every major federal, state, and local law enforcement agency in the United States, 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.
A regulatory contradiction revealed?
While Coinbase’s selection by the U.S. Marshal Service demonstrates its ability to serve government entities, the exchange has faced regulatory scrutiny from agencies such as the U.S. Securities and Exchange Commission (SEC).
Despite this, the US government has recently transferred more than 3,940 BTC worth $241 million to Coinbase, which was initially seized from drug trafficker Banmeet Singh during a January 2024 trial.
John E. Deaton, pro-crypto lawyer critical the U.S. government’s actions, calling them “absurd.” Deaton specifically called out SEC Chairman Gary Gensler and U.S. Senator Elizabeth Warren, noting that Gensler continues to work under the Warren administration while supposedly joining the anti-crypto movement she pledged to create when she announced her re-election.
Deaton pointed out the irony of the U.S. government using Coinbase to Bitcoin Transfers while the exchange itself faces accusations of alleged illegal trading activities from the SEC and its chairman Gary Gensler.
Deaton pointed out the contradiction between Gensler, as SEC chairman, declaring Coinbase’s activity illegal, and the U.S. government relying on the same “illegal” activity to sell Bitcoin to the American public.
Ultimately, the situation raises questions about the coherence and consistency of the government’s approach. cryptocurrenciesparticularly regarding Coinbase’s involvement in official transactions despite ongoing regulatory challenges.
The incident highlights 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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