Does the US government want to throw away $2 billion in 'dirty money'? Bitcoin plummets
Recently, the US government transferred approximately $1.9 billion worth of Bitcoin seized from the Silk Road black market case to the institutional service platform Coinbase Prime of cryptocurrency exchange Coinbase. This move has attracted market attention.
According to data from blockchain analysis firm Arkham Intelligence, on December 2, a wallet associated with the US government transferred about 19,800 Bitcoins (worth $1.9 billion at the time) to a deposit address on Coinbase Prime. These Bitcoins originated from the investigation of James Zhong in 2021, who was convicted of telecom fraud related to the Silk Road market.
The US Department of Justice announced in 2022 that it had seized over 50,000 Bitcoins from Zhong, some of which were stored in 'a single-board computer buried under a blanket in a popcorn tin.' The government subsequently transferred many Bitcoins to different wallets, but as of the time of publication, it still holds about $18 billion in Bitcoins.
Silk Road was a notorious darknet market that conducted millions of dollars in cryptocurrency transactions, where users could purchase illegal items such as weapons, drugs, and stolen credit card information. The platform's founder, Ross Ulbricht, was sentenced to life in prison without parole in 2015. Since the US elections in 2024, many in the cryptocurrency industry have called for Trump to reduce Ulbricht's sentence.
Yesterday, Bitcoin briefly fell below $95,000 during trading, dropping about 2% on the day, but has since rebounded to around the $96,000 mark.
It remains unclear whether this transfer is part of the authorities' strategy to trade or sell these funds. Some US lawmakers, including Senator Cynthia Lummis and incoming President Trump, have suggested establishing a 'strategic Bitcoin reserve' in the US through legislation.
Notably, the US Federal Bureau of Investigation (a federal agency responsible for seizing cryptocurrencies and other assets related to criminal activity) stated in July this year that it would cooperate with Coinbase Prime to host tokens related to asset seizures. However, Coinbase is still facing a civil lawsuit filed by the US Securities and Exchange Commission in June 2023.
