US government moves $1 billion in seized Silk Road BTC, prompting liquidation fears

Key learning points

  • A wallet linked to seized Silk Road funds moved $1.08 billion in BTC.
  • The address moved 39,174 BTC to two new wallets and 9,825 BTC to a wallet allegedly belonging to Coinbase.
  • The money was originally seized in November 2021 by Silk Road operator James Zhong.

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The DOJ may have sent some of the seized Silk Road funds to Coinbase, but that doesn’t mean they’re about to liquidate.

$1.08 billion in BTC

It seems that some of Silk Road’s bitcoins are on the move.

On-chain data shows that a Bitcoin wallet address linked to the US government moved about 49,000 BTC yesterday — an amount worth about $1.08 billion at the time of writing.

The address, which starts with BC1QMXtransferred approximately 9,000 BTC ($199 million) to an address beginning with BC1QEthen 30,174 BTC ($667 million) to a second address starting with BC1QFand 9,825 BTC ($217 million) to a third address from 367 years. Just over 825 bitcoins ($18 million) remain at the original address.

According to on-chain security company PeckShieldthe original address belongs to the US government, which uses the wallet to store a portion of the 50,676 BTC ($1.12 billion) confiscated from Silk Road operator James Zhong in November 2021. Zhong obtained the amount by using the withdrawal mechanism of the darknet marketplace in September 2012. He pleaded guilty to one count of wire fraud in November 2022.

The first two addresses, which received a total of 39,174 BTC, are newly created. However, PeckShield identified the third address (367YO) as belonging to US-based crypto exchange Coinbase. Bitcoin on-chain analytics company Glasnode and on-chain analytics company Look at chain both echoed PeckShield’s findings. Crypto Briefing was unable to independently verify ownership of the wallet.

The moving funds led to speculation on Twitter that the Justice Department may want to sell some of the bitcoins it sent to Coinbase. That seems unlikely, however, given that the US government has historically chosen to liquidate its bitcoin holdings through public auctions.

Disclosure: At the time of writing, the author of this piece owned BTC, ETH, and several other crypto assets.

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