The U.S. government plans to dump $2 billion in 'dirty money'? Bitcoin responds with a drop
Recently, the U.S. 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 the cryptocurrency exchange Coinbase. This move has drawn market attention.
According to data from blockchain analysis firm Arkham Intelligence, on December 2, a wallet associated with the U.S. government transferred approximately 19,800 Bitcoins (then valued at $1.9 billion) to a deposit address on Coinbase Prime. These Bitcoins originated from the 2021 investigation of James Zhong, who was convicted of telecom fraud related to the Silk Road market.
In 2022, the U.S. Department of Justice announced that over 50,000 Bitcoins had been seized 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 writing, still holds approximately $18 billion in Bitcoin.
Silk Road was a notorious dark web market that facilitated 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 the possibility of parole in 2015. Since the 2024 U.S. elections, many in the cryptocurrency industry have called on Trump to lighten Ulbricht's sentence.
Yesterday, Bitcoin briefly dipped below $95,000 intra-day, down about 2% on the day, but has since rebounded to near the $96,000 mark.
It remains unclear whether this transfer is part of the authorities' strategy to trade or sell these funds. Some U.S. lawmakers, including Senator Cynthia Lummis and incoming President Trump, have suggested establishing a 'strategic Bitcoin reserve' in the U.S. through legislation.
Notably, the U.S. Marshals Service (the federal agency responsible for seizing cryptocurrencies and other assets related to criminal conduct) stated in July this year that it would cooperate with Coinbase Prime to custody tokens related to asset seizures. However, Coinbase is currently still facing a civil lawsuit filed by the U.S. Securities and Exchange Commission in June 2023.
