Selling BTC? US Government Transfers $600 Million in Seized Bitcoin to Coinbase Prime

TLDR

The US government transferred 10,000 Bitcoin (worth about $600 million) from seized Silk Road funds to Coinbase Prime.
Attorney Scott Johnsson believes this transfer indicates the US Marshal Service is selling the Bitcoin based on their agreement with Coinbase.
The US government still holds over 200,000 Bitcoin worth about $12 billion from various seizures.
This transfer comes shortly after Donald Trump’s pro-Bitcoin statements and during discussions of a “crypto reset” with Kamala Harris.
The price of Bitcoin has remained relatively stable around $58,000 despite this large transfer.

The United States government has moved a significant amount of Bitcoin seized from the infamous Silk Road dark web marketplace to cryptocurrency exchange Coinbase Prime.

On Wednesday, August 14, blockchain analytics firm Arkham reported that 10,000 Bitcoin, valued at approximately $593.5 million, were transferred from a wallet associated with the US government to a Coinbase Prime deposit address.

This transfer is part of a larger holding of cryptocurrencies seized by US authorities from various criminal investigations. According to Arkham Intelligence, wallets linked to the US government currently hold around 203,239 Bitcoin, worth approximately $12.42 billion at current prices.

BREAKING: 10K Silk Road BTC ($593.5M) moved to Coinbase Prime

Wallet bc1ql received 10K BTC from a known US Government wallet 2 weeks ago. This BTC has just been sent on to 33J, a Coinbase Prime deposit wallet. pic.twitter.com/kNLsiJzL95

— Arkham (@ArkhamIntel) August 14, 2024

The moved funds are believed to be part of the Bitcoin seized in connection with the Silk Road case. In November 2022, the Department of Justice (DOJ) announced the seizure of over 50,000 Bitcoin, then valued at $3.36 billion, from James Zhong. Zhong had pleaded guilty to wire fraud related to exploiting Silk Road’s transaction system in 2012.

The US Marshals Service (USMS), a division of the DOJ, entered into a partnership with Coinbase Prime in June 2024 to provide custody and advanced trading services for the agency’s “Class 1” (large cap) digital assets. This agreement has led to speculation about the government’s intentions regarding the seized cryptocurrencies.

Scott Johnsson, a finance lawyer and general partner at Van Buren Capital, argues that the recent transfer likely indicates a sale of the seized assets by the US government. Johnsson points to the terms of the servicing agreement between USMS and Coinbase, which require USMS assets to remain completely segregated.

He suggests that when a transfer is made to a commingled exchange address like Coinbase Prime, it likely means the USMS has already sold or is imminently selling the assets.

Yes, US Marshal Service (USMS) is almost certainly selling silk road bitcoin. Joey is right (at least in the present). USMS has been sending BTC to a custodial address required by the terms of the servicing agreement that USMS entered into with Coinbase in June. Given the…

— Scott Johnsson (@SGJohnsson) August 16, 2024

Johnsson also references a DOJ Office of Inspector General report and the crypto services agreement RFP, which stipulate the rapid liquidation of assets within five business days of forfeiture. However, official confirmation of these sales may not come until the publication of the DOJ’s Asset Forfeiture Program FY2024 report in January 2025.

The timing of this transfer has drawn attention, coming shortly after former President Donald Trump’s speech at the Bitcoin 2024 conference where he proposed establishing a “strategic national Bitcoin stockpile.”

It also coincides with discussions of a potential “crypto reset” between Vice President Kamala Harris and industry leaders.

Some crypto industry veterans have expressed skepticism about the alignment of these government Bitcoin transfers with Harris’s crypto reset promises. The recent town hall meeting with Harris has been criticized by some as a missed opportunity to demonstrate support for the cryptocurrency industry.

Despite the large transfer, the price of Bitcoin has remained relatively stable. As of August 176, 2024, Bitcoin is trading at $59,310.65, showing a 1.83% increase over the past week.

The cryptocurrency’s market capitalization stands at approximately $1.15 trillion, with a 24-hour trading volume of $32.92 billion.