All Bitcoin held by the U.S. government is under increasing scrutiny as allegations emerge that tens of millions of dollars in seized cryptocurrency were stolen. These claims involve insider access at a federal custody contractor, prompting a renewed focus on how digital assets are managed by government entities.
Blockchain investigator ZachXBT reported that over the weekend, more than $40 million in digital assets was allegedly siphoned from wallets associated with the U.S. Marshals Service (USMS). The reported culprit is said to be John Daghita, identified through online sources as the son of Dean Daghita, the president and CEO of Command Services & Support (CMDSS), a Virginia-based technology firm awarded a contract in October 2024 to manage seized digital assets. This includes cryptocurrencies connected to high-profile criminal cases, like the notorious 2016 Bitfinex hack.
The allegations gained traction after a recorded dispute surfaced in a private Telegram chat, where the accused individual displayed a wallet holding millions of dollars in crypto and appeared to transfer funds in real time. Subsequent blockchain analysis linked these wallets to addresses known to be associated with government-seized assets.
ZachXBT’s investigation highlighted a transaction trail involving a government address that received approximately $24.9 million in Bitcoin tied to various Bitfinex-related seizures earlier in 2024. Further analysis suggested that around $20 million was withdrawn from USMS-linked wallets in October 2024. While most of these funds were reportedly returned within 24 hours, about $700,000 that passed through instant exchanges remains unaccounted for. ZachXBT warns that the total suspected thefts could exceed $90 million when considering other observed wallet activity.
The situation has not gone unnoticed by industry stakeholders. David Bailey, CEO of bitcoin-focused firm Nakamoto, took to social media to voice his concerns, urging the U.S. Treasury to secure the private keys from the Justice Department following these alarming revelations.
The U.S. government currently holds a substantial amount of Bitcoin acquired through various law enforcement actions, with estimations suggesting control over approximately 198,000 BTC, while some analytics predict figures exceeding 300,000 BTC, valued at tens of billions of dollars. If these insider allegations are accurate, it indicates a significant vulnerability in the custody practices currently in use, casting doubt on the security of a considerable portion of the government’s Bitcoin reserves.
Previous reports have indicated that the USMS had been relying on manual tracking systems, which raised concerns over the accuracy of its crypto holdings. Furthermore, CMDSS’s contract was contested in 2024 by a competing firm, citing potential conflicts of interest and licensing issues.
Adding to the controversy is a separate investigation into whether U.S. authorities improperly sold bitcoin intended for the Strategic Bitcoin Reserve. Earlier this year, journalist Frank Corva reported that prosecutors in the Southern District of New York and the USMS may have sold bitcoin related to a case involving Samourai Wallet, potentially violating an executive order directing that seized bitcoin be retained in the Strategic Reserve rather than liquidated.
On-chain evidence indicated movement of 57.55 BTC linked to the Samourai plea agreement through a Coinbase Prime address, arousing suspicion that these assets had been improperly disposed of. Although U.S. officials denied any sale and affirmed that the Samourai Wallet bitcoin would remain part of the government’s balance sheet under the executive order, they did not provide blockchain evidence to support their claims. The underlying controversy surrounding the management of seized bitcoin has only intensified with the latest allegations, leaving the public and industry insiders questioning the integrity of the processes involved.
