The US Government Moves $1 Billion In Seized Bitcoins

An upcoming sale could be signaled by a $217M Coinbase transfer

‍

According to recent media reports, the U.S. government has been moving bitcoin worth $1B among its wallets, which includes a $217M transfer to the crypto exchange Coinbase.

‍

As a result of this activity, there have been fears among the Bitcoin community that this could signal the beginning of a sale of Bitcoin, causing its price to plummet.

‍

On Wednesday, Glassnode, a company that specializes in on-chain analysis, flagged the transfers in question. Apparently, there was a transfer of 9,861 Bitcoin to Coinbase, as mentioned in the report. There were additionally 40,000 BTC’s being sent between wallets controlled by the U.S. government and cryptocurrency exchanges, which Glassnode pointed out were associated with law enforcement seizures by the government.

‍

There was a six-hour delay before PeckShield, another company that provides on-chain security, tweeted that both wallets had been consolidated in order to secure the roughly 40,000 BTC.

‍

The seizure of the Silk Road

‍

There is a strong possibility that the funds were sourced from Silk Road, the notorious darknet market, and it is well-known that the government seized over 51,000 BTC from an individual who hacked the darknet market at the beginning of November 2021, and ended up seizing them in March 2022 from the same individual.

‍

During Silk Road's heyday, narcotics and firearms were among the things being advertised on the first crypto-enabled dark market where listings were similar to those seen on eBay for all kinds of contraband. It was founded by Ross Ulbricht in 2011, and it closed down after Ulbricht was arrested in 2013 since he had been convicted of fraud.

‍

During the time period at the time, the authorities seized a total of 173,991 bitcoins, out of which 144,336 belong to Ulbricht, which represents a total of around $29.1 million. These coins have been auctioned by the government in four separate auctions over the last two years.

‍

There was a civil forfeiture action filed by the United States Justice Department against a U.S.-based individual it claimed was in possession of more than 50,000 Bitcoins that they had stolen from the Silk Road website in a civil forfeiture action filed by the Department of Justice against the individual. 

‍

It was announced in November 2022 that the Federal Bureau of Investigation announced that a Georgia man called James Zhong had pleaded guilty to wire fraud as part of a court case. Under the plea deal with the government, he was sentenced to nine years in prison and forfeited to the government his stash of BTC in exchange for his sentences.

‍

In the last week, Bitcoin has fallen by 7%.