- China’s covert BTC sales could drive prices down to $40K amid budget gaps.
- Legal uncertainty around seized crypto fuels risks, corruption, and backdoor deals.
- Local governments secretly liquidate seized Bitcoin, raising global market concerns.
China is sitting on a Bitcoin treasure chest. While crypto remains illegal to trade on the mainland, local governments are quietly cashing in behind the scenes. The country currently holds around 194,000 BTC second only to the U.S. However, these coins weren’t purchased as investments.
They were seized during crackdowns on cybercrime, money laundering, and online scams. Now, cities across China are liquidating them through offshore firms to meet budget shortfalls. This covert activity could send shockwaves through the global market and drop Bitcoin prices dramatically possibly to $40,000.
🚨 China plans to dump $BTC to $40K
— Leviathan (@TechLeviathan) April 17, 2025
They already sold it for $400M and it's only beginning
I'm risking a lot by revealing this, but here you go
Here's what China is secretly doing and it will affect on BTC👇🧵 pic.twitter.com/ponfsFDvFM
Backdoor to Liquidation
Despite China’s public stance against digital assets, authorities are finding ways to turn crypto into cash. Each city is managing its own strategy. Some partner with private tech companies to sell seized assets on foreign exchanges.
Others work through complex, opaque channels. In one notable case, a Shenzhen-based firm, Jiafenxiang, handled over $400 million in crypto sales for various city governments. These operations function in legal limbo neither fully authorized nor explicitly banned.
Legal Uncertainty Fuels Risk
China lacks national policy on handling confiscated crypto, creating confusion across jurisdictions. Judges, prosecutors, and lawyers have convened multiple times to call for clear guidelines.
Some advocate recognizing crypto as property to streamline court processes. Others propose a centralized disposal agency to monitor and audit crypto sales. The absence of regulation leaves room for corruption and backdoor deals, especially with billions of dollars involved.
Silent Revenue Source
In 2023 alone, over 3,000 money laundering cases were prosecuted in China, linked to $59 billion in illegal activity. Some of the confiscated crypto has already been sold to foreign buyers. The profits, often converted into yuan, quietly fund local governments grappling with financial stress. In total, fines and asset seizures contributed 378 billion yuan to public revenues last year.
The Global Stakes
China’s silent selling spree poses a threat to the Bitcoin market. Large-scale liquidations could drag down BTC’s price significantly. Moreover, with the U.S. pushing toward crypto legalization and even exploring Bitcoin reserves, China faces a strategic dilemma. It can either keep profiting in the shadows or develop a formal crypto policy. Moving reserves through Hong Kong’s regulated market might be one option to bridge legality with financial need.
