The U.S. government just transferred $1.9 billion in Bitcoin seized from Silk Road to Coinbase Prime.
On December 2, data from Arkham Intelligence showed that the U.S. government had transferred nearly 19,800 BTC, equivalent to $1.9 billion at the time, from a government-linked wallet to Coinbase Prime. This is part of a total of over 50,000 BTC seized from James Zhong in 2021, when Zhong was convicted of online fraud related to the Silk Road darknet marketplace.
This Bitcoin was discovered on a computer hidden under a blanket at Zhong's home, which had previously been a site for illegal transactions such as drugs, weapons, and stolen credit card information.
Source: Arkham Intelligence
The transfer of nearly $2 billion in Bitcoin comes amid the U.S. government's current holdings of about $18 billion in Bitcoin seized from criminal activities. This move raises questions about the management strategy of this large asset block: will the government sell this Bitcoin to supplement the budget or retain it as part of a 'strategic Bitcoin reserve,' as proposed by some lawmakers, including Senator Cynthia Lummis and President-elect Donald Trump?
Choosing Coinbase Prime as the partner to manage the seized Bitcoin complicates the situation even further, especially as this exchange is facing a civil lawsuit from the U.S. Securities and Exchange Commission (SEC). In July, the U.S. Marshals Service announced a partnership with Coinbase Prime to manage the cryptocurrency assets.
This event has also reignited calls for clemency for Ross Ulbricht, the founder of Silk Road, who is currently serving a life sentence. Many in the cryptocurrency community hope that President-elect Trump will fulfill his promise of clemency for Ulbricht on the very first day of his term, although he missed this opportunity during his previous term.
