U.S. Department of Justice Makes $1B BTC Transaction, Raising Liquidation Concerns

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Key Takeaways

  • A wallet connected to seized Silk Road funds moved $1.08 billion in BTC.
  • The wallet sent 39,174 BTC to two different addresses, and 9,825 BTC to a Coinbase wallet.
  • The funds were originally confiscated from Silk Road operator James Zhong in November 2021.

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

On-chain data shows that a Bitcoin wallet address associated with the Department of Justice transferred approximately 49,000 BTC yesterday—a sum worth roughly $1.08 billion at the time of writing. 

The address, which begins with BC1QMX, moved about 9,000 BTC ($199 million) to an address beginning in BC1QE, then 30,174 BTC ($667 million) to a second address beginning in BC1QF, and 9,825 BTC ($217 million) to a third address starting in 367YO. A little over 825 bitcoins ($18 million) remain in the original address.

According to on-chain security firm PeckShield, the initial address is owned by the U.S. government, which uses the wallet to store some of the 50,676 BTC ($1.12 billion) it seized from Silk Road operator James Zhong in November 2021. Zhong acquired the sum by exploiting the darknet marketplace’s withdrawal mechanism in September 2012. He pleaded guilty to one count of wire fraud in November 2022. 

The first two addresses, which received a combined total of 39,174 BTC, were freshly created. However, PeckShield identified the third address (367YO) as belonging to U.S.-based crypto exchange Coinbase. Bitcoin on-chain analytics firm Glassnode and on-chain analytics firm Lookonchain both corroborated PeckShield’s findings. Crypto Briefing was unable to independently confirm wallet ownership.

The moving funds prompted speculation on Twitter that the Department of Justice could be looking to sell some of the bitcoins it sent to Coinbase. That seems unlikely, however, as the U.S. government has historically elected 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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