New analysis shows that the US government holds a significant amount of Zcash (ZEC).

The US government appears to be holding a significant amount of Zcash — a privacy-focused digital asset — according to a new analysis from Arkham Intelligence.

This position is estimated to be worth around $1.5 million, stemming from assets seized during the 2017 AlphaBay black market takedown.

Arkham states that they tracked the flow of funds and linked these Zcash holdings to government-controlled wallets through transactions related to the Department of Justice’s investigation of AlphaBay.

The US government has not yet commented on this discovery.

While notable because Zcash offers high privacy features, this holding represents only a small fraction compared to the US government’s massive crypto stash.

Currently, the government holds nearly $30 billion in Bitcoin and $187 million in Ethereum, primarily obtained from law enforcement seizures.

However, the fact that the government holds an asset designed to conceal financial traces creates an interesting paradox — especially as regulators increasingly focus on illicit financial risks and are putting Zcash and similar protocols in the spotlight for debate.

These tensions will be discussed on December 15, when Zcash founder Zooko Wilcox, Aleo CEO Alex Pruden, and SpruceID founder Wayne Chang will participate in a four-hour roundtable with the US Securities and Exchange Commission (SEC).

Hester Peirce, head of the SEC’s crypto task force, said the discussion aims to help the agency better understand modern privacy tools. She emphasized that this new understanding could assist the SEC in refining its oversight approach without infringing on civil liberties.

Controversy over Zcash Traceability

The government’s discovery comes shortly after another controversial statement from Arkham, claiming they identified more than half of Zcash network activity.

In a post on December 8, Arkham said their system linked over 53% of Zcash transactions — both transparent and shielded — to identified individuals or organizations.

More than 48% of inputs and outputs were also assigned to specific entities, with a total traceable value exceeding $420 billion.

This announcement immediately sparked debate among security experts.

Critics pointed out that most Zcash activity occurs in “transparent” mode, similar to Bitcoin, making it easier to trace.

Meanwhile, shielded transactions, which encrypt all transaction information, remain very difficult to analyze.

Wilcox also rebutted, arguing that Arkham’s data does not demonstrate decryption of the “shielded pool” — Zcash’s core privacy feature — but mainly reflects activity from public addresses.

Zcash: The Best Performing Asset of the Year

Despite the controversy, Zcash remains one of the best-performing tokens of the year.

The price of ZEC has surged over 1,000% in recent months, peaking above $700 in November before correcting to around $434, according to CoinPhoton data.

This strong rally has attracted institutional interest, with Grayscale recently filing to launch an spot ETF for Zcash.

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