US government moves BRL 4.6 billion in Bitcoin, BRL 1.13 billion has a brokerage as its destination

A movement of 40,000 bitcoins, equivalent to R$4.6 billion, caught the attention of the community on Tuesday night (7). In addition to being under the control of the US government, 9,825 bitcoins (R$1.13 billion) were sent to a Coinbase exchange wallet.

Such bitcoins are linked to the Silk Road hack, the famous illicit market shut down by the FBI in 2013.

Long story short, the hack happened in 2012, when Silk Road was still active. On that date, the hacker managed to steal more than 50,000 bitcoins by exploiting a grotesque flaw on the site that allowed double withdrawals.

Nine years later, in November 2021, the US has recovered almost the full amount of this hack. According to an official statement, the bitcoins were hidden in a can of popcorn on a computer.

US Moves 40,000 Bitcoins Linked to Silk Road Hack

Bitcoin was at its peak on the date of the bust, worth $68,564 per unit. Given that the confiscation is one of the largest in history, it lags behind the seizing of Silk Road itself (144,000 BTC) and the 94,000 bitcoins linked to the Bitfinex hack.

As of this Tuesday (7), the US has moved 40,000 bitcoins associated with this case. According to information from Glassnode, 1.13 billion BRL in Bitcoin was destined for the Coinbase brokerage, while the other 30,174 bitcoins ended up on a change of address i.e. returned to the US controlled wallet.

“Approximately 40,000 BTC from wallets related to seizures by US government officials are on their way”wrote Glassnode. “Of these, most (so far) appear to be internal transfers, but approximately 9,861 BTC seized by the Silk Road hacker have been sent to Coinbase.”

The move caught the attention of the community due to its connection to Coinbase. After all, when someone sends bitcoins to an exchange, their intention is to sell their assets.

Another option would be to use the custodial service of the US brokerage. However, that wouldn’t make much sense either, since only a portion was sent to Coinbase, and what’s more, the US always retains ownership of seized assets.

Bitcoins belong in the US, you see

In theory, the victim of this theft was Ross Ulbricht, creator of Silk Road. However, since the site was shut down by the FBI and Ulbricht was sentenced to life in prison, these bitcoins belong to the US. In other words, the US government can do whatever it wants with it.

Therefore, investors expect the US to auction such bitcoins on the market, as it has done in the past.

Referring to the Silk Road case itself, the US auctioned 29,657 bitcoins from this illicit market in June 2014. The amount was valued at $17 million at the time, but is now worth $654 million.

Given this, it is possible that the US is looking to partner with Coinbase to remove this new batch. However, it is unclear whether the government plans to auction such bitcoins or sell them directly to the exchange. This last option appears to be the worst option for the market as it would create tremendous selling pressure.

Source: Live Coins