US government moves $2 billion in Bitcoin to Coinbase

A cryptocurrency wallet belonging to the U.S. Department of Justice (DOJ) and contains $2 billion in confiscated bitcoin has reportedly attempted a transaction towards Coinbase Prime. The initial transfer involved a minor sum of 0.001 BTC, believed to be a test transaction.

Following the initial transaction, an additional transfer of 1,999.999 BTC, valued at around $131.27 million, was directed into the Coinbase Prime hot wallet as of 16:59 UTC.

The wallet holds over 30,174 bitcoins and initiated the test transaction with an address recognized on Arkham as belonging to Coinbase Prime, receiving one block confirmation thus far. Such test transactions are common practice, often preceding larger transfers, as exchanges generally require multiple confirmations for transaction validation.

The bulk of the funds were rerouted to a change address, indicating the possibility of the assets remaining within control of the original entity.

The massive bitcoin cache is believed to be linked to assets seized by the DOJ from the now-defunct dark web marketplace Silk Road. A U.S. appeals court upheld last year a decision mandating the forfeiture of 69,370 bitcoins, among other cryptocurrencies, related to Silk Road.

In 2020, the DOJ initiated efforts to forfeit cryptocurrencies valued at over $1 billion at that time, connected to the Silk Road marketplace. The recent transactions stem from a wallet associated with James Zhong, who in 2022 was convicted for acquiring over 50,000 BTC from Silk Road through illicit means. U.S. authorities, upon raiding Zhong’s residence in 2021, uncovered hardware wallets laden with bitcoin, including one ingeniously concealed within a popcorn tin.

This move comes after the U.S. government’s sale of 9,861 BTC seized from Zhong for over $215 million in March 2023, reducing the holdings to around 40,000 BTC. Today’s transaction coincides with a drop in bitcoin’s price which lost more than 7 percent as of writing.

The Silk Road marketplace had been operational over a decade ago, and facilitated the anonymous trade of illegal goods, including narcotics, weapons, and stolen financial data. Ross Ulbricht, the platform’s founder, was arrested in 2013 and is currently serving dual life sentences without the option for parole.