The years of investigation have paid off: the Saxon police have secured Bitcoins worth two billion euros from the makers of Movie2k.to. What will happen to the unexpected windfall is still up in the air.
Slow procedures are usually cumbersome and expensive. In the case of Movie2k, however, the authorities’ slowness more than pays off.
The Saxon police had been investigating those behind the illegal streaming site Movie2k for five to six years. In December, she arrested one of the two people behind it, who betrayed his co-mastermind by mid-2020 and gave out around 2,200 Bitcoins.
But this was only a small portion of the Bitcoins that he and his business partner had hoarded. In mid-January 2024, the Saxons managed to confiscate a whopping 50,000 Bitcoins. These Bitcoins would have been worth almost 400 million euros at the end of 2019, almost half a billion euros in mid-2020 – and today a whopping two billion euros.
The slow progress of the criminal proceedings has given the state of Saxony a speculative profit of 1.5 billion euros!
Among the richest internet entrepreneurs in Germany
Movie2k, Movie4k from the end of 2013, was a popular platform where you could watch films for free and not entirely legally. It was run by a 40-year-old Saxon and a 37-year-old Pole, who are now accused of having committed 880,000 cases of copyright infringement.
The two developers made money with Movie2k primarily through advertising and subscription traps. They also probably injected malware into their visitors’ browsers, which allowed them to mine cryptocurrencies unnoticed.
Starting around 2012, the Movie2k makers invested most of the money they collected in Bitcoin. Presumably they wanted to put their profits on an uncensorable platform that was not directly tied to their identity. The fact that from 2012 onwards they made more investment profits than the operation of the streaming site would have ever made was probably more of a side effect.
Today, in 2024, the two would be among the richest internet entrepreneurs in Germany – if they still had the Bitcoins instead of facing a long sabbatical behind bars.
As much as the annual budget of the Saxon Ministry of the Interior
This is by far the largest Bitcoin seizure of all time for a German police department. Thanks to them, the German government became a top holder overnight. Among the countries, only the USA and China hold more Bitcoins; among companies, some exchanges, ETF publishers and of course MicroStrategy.
At a good two billion euros, the confiscation corresponds to the entire annual budget of the Saxon Ministry of the Interior. This could probably be used to finance the salaries of all Saxon police officers for several years. The subsidies for agricultural diesel, which should be cut, amount to just over a fifth of that at 440 million euros.
For Finance Minister Lindner and his coalition partners, Bitcoins should be like a gift from heaven. With them you could fulfill some wishes or plug budget holes without any pain.
Rather worrying for Bitcoin owners
For Bitcoin investors, however, the confiscation does not bode well. The 50,000 Bitcoins had been off the market for around ten years; Presumably there was no need for the Movie2k developers to take the risk of selling. Now these coins are threatening to flood into the market.
Together with the 142,000 Bitcoins from the Mt.Gox inventory, the 500,000 Bitcoins from Grayscale that are still open, and a few other upcoming auctions in the USA, there is currently a risk of disturbingly large sums hitting the market. However, one should also be aware that the 50,000 Bitcoins that the LKA Saxony currently manages will probably not be sold in the short term.
A spokeswoman for the State Criminal Police Office said it was not yet known how to use the coins. Some of them will probably be auctioned off – North Rhine-Westphalia has even set up a platform for this – and some will be sold on stock exchanges or over-the-counter. That would be the usual way. But it will still take some time.
And who knows – maybe the two billion euros will have turned into three, four or five by the time the Bitcoins are sold.