The United States government task force seized control of over $2 million worth of Bitcoin to pay the ransom off a hacker that targeted Colonial Pipeline System on June 7. The authorities recovered 63.7 Bitcoins according to a warrant filed by the U.S District Court in the Northern Districts of California.
The news of the recovery quickly spread into the mainstream media leading to many outlets speculating that the U.S government managed to hack Bitcoin addresses in order to gain access to the funds. A heated debate went on with many experts pondering if an entity can actually break bitcoin encryption and if that is the case, why waste it on a wallet with only $2 million?
Assuming the government was willing to create short-term havoc in the crypto market, they will need to make enough large sales that would negatively affect the prices, leading to three signs that indicate the scenario unfolding.
The government would need to trade CME Bitcoin futures. In order to create an imbalance, the government will need to trade at least $58k in the CME Bitcoin future leading to a rapid increase in open interest which will evidently rattle the market.
The government can also distort the future premium of contract sellers since fixed-calendar futures do not have a funding rate, therefore their prices will differ quite significantly from traditional spot exchanges. An aggressive activity in future contracts is an early sign of government interference.
Most crypto exchanges establish their servers in undisclosed locations, yet the government could seize control over servers and web domains. According to an article by Cointelegraph, the U.S Department of Justice has a framework that is enough for a crypto transaction to be carried out within the U.S computer systems, and provoke enforcement action.
