The Chinese government may hold a significantly larger amount of Bitcoin than MicroStrategy, one of the largest corporate holders of Bitcoin. According to reports, the Chinese government may have a hidden stash of BTC that is believed to be over 1% of the total Bitcoin supply.
The Bitcoin Scam That Gave China a Hidden Stash
The Chinese government's secret stash of BTC came from a seizure of Bitcoin from a large scam starting in 2018. The scam, PlusToken, was promising monthly payments to users' wallets. Ultimately, they took some $2B-$3B. In the US, when we recover billions from a ponzi scheme, we try to give the money back to the victims. China just walked away with a few bills in BTC.
Unclear Status of the Seized BTC, But Recent Activity on Wallets Raises Questions
So we know the Chinese government seized the BTC from this scam, but the current status of the seized BTC is unclear. There have been no official statements from the government on whether they still hold the BTC or what they plan to do with it. That being said, there has been some recent activity on the wallets holding the BTC has raised questions about what the Chinese government may be planning to do with its secret Bitcoin stash.
We know that some of the BTC moved to exchanges, and has been passed through mixers. Mixers, like the controversial Tornado Cash, are protocols used to obscure what wallets were used in a transaction, primarily used to hide identities. For individual use cases, this is common in tax evasion and illicit activities, but on the larger end we know hacking groups from North Korea have included mixers as part of their standard operating procedure. You don’t have to be breaking the law to use a mixer, you just usually are.
The weird thing about this whole story is that China banned BTC and mining. So this is likely either them hedging their bets, or waiting to cause some chaos. China had real infrastructural problems that forced those limitations, including rolling blackouts due to power grid limitations. It’s tough to predict their intentions, but I don’t think anyone should feel good about the Chinese government owning 1% of something you’re invested in.