Arkham Intelligence reports that the U.S. government currently holds about $1.5 million in Zcash (ZEC), originating from assets seized during the 2017 AlphaBay darknet takedown. While notable because Zcash is built for privacy, the amount is tiny compared to the government’s much larger crypto holdings — nearly $30 billion in Bitcoin and $187 million in Ethereum, mostly from similar seizures.

The disclosure highlights a paradox: regulators now hold an asset designed to obscure financial activity at a time when policymakers are intensifying scrutiny on illicit finance and privacy-focused protocols.

This tension will be discussed on December 15, when Zcash founder Zooko Wilcox, Aleo CEO Alex Pruden, and SpruceID founder Wayne Chang meet with the SEC for a four-hour roundtable. SEC commissioner Hester Peirce says the goal is to better understand modern privacy tools while protecting civil liberties.

The report also follows Arkham’s controversial claim that it has attributed more than 53% of all Zcash transactions to identifiable entities — a figure critics argue reflects the blockchain’s transparent activity rather than any breakthrough in analyzing shielded transactions. Zooko Wilcox disputes that Arkham has penetrated Zcash’s core privacy layer.

Despite scrutiny, Zcash has been one of the best-performing major tokens of the year, climbing over 1,000% and hitting a peak above $700 before easing to around $434. The strong rally has revived institutional interest, with Grayscale filing for a spot Zcash ETF.