US Authorities Initiate Test Sale of $2 Billion Seized Silk Road Bitcoin

The U.S. government has initiated the process of liquidating $2 billion worth of Bitcoin seized from the Silk Road online marketplace. A test transaction of 0.001 BTC was sent to Coinbase, signaling an imminent sale of the vast majority of the Bitcoin, valued at approximately $2 billion. This move follows a previous sale of 10,000 BTC in March.

U.S. Authorities Initiate Test Transaction for Sale of $2 Billion in Seized Silk Road Bitcoin

In a significant development, U.S. authorities have initiated a test transaction as part of plans to liquidate approximately $2 billion worth of Bitcoin seized from the infamous Silk Road marketplace. This move follows a previous sale of 10,000 BTC in March, marking a pivotal moment in the government's handling of digital assets obtained from criminal investigations.

On-Chain Transactions Reveal Bitcoin Movement

On-chain data analysis indicates that a test transaction of 0.001 BTC was made from a stash of approximately 30,174 BTC, valued at $2 billion, formerly associated with the Silk Road marketplace. The transfer was received by Coinbase, the largest cryptocurrency exchange in the U.S.

Identification of Source and Destination

Research firm Arkham Intelligence has identified the source of the BTC as the Silk Road funds and the destination as Coinbase. This transaction is believed to be a precursor to a larger sale of the coins, as observed in previous liquidation events.

Previous Sale and Expected Timeline

In March, the U.S. government sold 10,000 BTC associated with Silk Road for approximately $216 million. That sale was preceded by on-chain transactions similar to those observed in the current case. The United States Marshals Service (USMS) is responsible for selling these seized assets, and it has historically been a significant seller of confiscated Bitcoin.

Agency Mandate and Congressional Debate

Despite calls from some U.S. lawmakers to retain these assets as a strategic reserve, the USMS has continued to sell the confiscated funds in accordance with its mandate to dispose of assets seized during criminal investigations.

Transfer to New Wallet Ahead of Liquidation

Approximately $2 billion worth of Bitcoin seized from the Silk Road marketplace has been transferred to a new wallet ahead of a potential liquidation. On April 2, a wallet associated with the U.S. Department of Justice initiated a test transaction of 0.001 BTC to a Coinbase Prime address. Shortly after, the same wallet transferred 30,174 BTC, valued at approximately $2 billion, to a new address.

Confiscated Bitcoin from James Zhong

Online investigators have linked the DOJ wallet to Bitcoin seized from James Zhong, who was convicted in 2022 of "unlawfully obtaining" cryptocurrency from Silk Road. Zhong stole over 50,000 bitcoins from the marketplace in 2012. U.S. authorities raided his property in 2021 and discovered hidden wallets containing Bitcoin, including one concealed in a popcorn tin. The majority of this confiscated cryptocurrency was sent to the address that moved over 30,000 BTC on April 2.

Previous Silk Road Liquidation

In March 2023, U.S. government officials reported the sale of approximately 9,861 BTC from the cryptocurrency seized from Zhong for over $215 million, leaving approximately 40,000 BTC remaining. The April 2 transaction occurred following a decline in the price of Bitcoin, which fell by over 7% to approximately $65,475 at the time of publication.

Background on Silk Road

The Silk Road marketplace operated from 2011 to 2013 and enabled users to purchase and sell illicit goods such as weapons, drugs, and stolen credit card information. In 2013, U.S. authorities arrested its founder, Ross Ulbricht, who is currently serving two life sentences without the possibility of parole.