Another US government transfer of Bitcoin originally seized from the infamous Silk Road has sparked widespread speculation on Wednesday, August 14. Blockchain analytics firm Arkham reported yesterday that 10,000 Silk Road BTC, worth approximately $593.5 million, were transferred to Coinbase Prime, a platform mainly used for institutional investors.
According to Arkham after at X: 10,000 Silk Road BTC ($593.5 million) moved to Coinbase Prime. Wallet bc1ql received 10,000 BTC from a well-known US government wallet 2 weeks ago. This BTC has just been forwarded to 33J, a Coinbase Prime deposit wallet.”
Is the US Government Selling Bitcoin?
This transaction follows a June announcement from the US Marshals Service (USMS), part of the Department of Justice, detailing a new partnership with Coinbase Prime to provide custody and advanced trading services for the “Class 1” (large cap) of the agency. ) digital assets. The community is divided on whether these moves represent a sale of the Bitcoin or just a transfer for custody purposes. That’s why many speculated that the US government isn’t selling.
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Scott Johnsson, a financial attorney and general partner at Van Buren Capital, expressed today takes a different position, arguing that the transaction represents a final sale of the seized assets by the US government. Johnsson noted:
“Yes, the US Marshal Service (USMS) is almost certainly selling Silk Road Bitcoin […] USMS sent BTC to a custody address required by the terms of the service agreement […] Since the agreement requires USMS assets to remain completely segregated, you can rest assured that USMS has already sold or will soon sell when a transfer eventually occurs to CB prime (or another mixed exchange address).
Johnsson further supported his claim by citing the DOJ’s Office of Inspector General (OIG) report and the crypto services agreement RFP, which stipulate the rapid liquidation of assets within five business days of forfeiture and the need for segregated wallet addresses to prevent commingling with cryptocurrencies. other assets.
It states: “The USMS intends to resolve this issue using the planned cryptocurrency services contract, which requires the contractor to liquidate cryptocurrency within five business days of the asset being forfeited.”
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Johnsson expects that formal confirmation of these sales may not appear until the release of the DOJ’s Asset Forfeiture Program FY2024 report in January. However, the unfolding events could provide earlier indications as more details become available through official channels or subsequent asset movements.
“The official confirmation will finally come (no later than) the DOJ’s Asset Forfeiture Program FY2024 report in January, if not sooner. I also don’t think it’s a coincidence that this started in earnest after Trump’s speech.”
Users on X expressed confusion about Johnsson’s analysis. Rodeo wondered: “These coins would have been sold at the end of last year[…] You’re saying that transferring these coins to Coinbase from their current address is enough to imply a sale because the Coinbase addresses are not completely separate addresses?”
In response to these concerns, Johnsson clarified: “Not necessarily just Coinbase (there is an intermediate step of segregated custody), but once they reach mixed addresses it is reasonable to conclude that they have been sold. And yes, there was a backlog of forfeited BTC that should have already been sold. Completing the services agreement appears to have been (at least part of) the delay.”
Notably, the latest BTC transaction by the US government comes just a few weeks after Republican presidential candidate Donald Trump proposed creating a “strategic national Bitcoin stockpile” at the Bitcoin 2024 conference. Rumors then surfaced that Democrats led by Kamala Harris might divest the US government of BTC assets from confiscations. Although Harris advocates a more pro-crypto stance, several experts reject this claim, based on her latest actions.
At the time of writing, BTC was trading at $59,336.
Featured image created with DALL.E, chart from TradingView.com