Silk Road Bitcoin Are ‘Almost Certainly’ Sold By US Gov, Claims Lawyer

As a seasoned researcher with over two decades of experience in the financial industry and a keen interest in the digital asset market, I find myself intrigued by the recent transfer of Silk Road Bitcoin to Coinbase Prime by the US government. The speculation surrounding this move is reminiscent of a game of chess, where each piece’s position on the board can hold significant implications for the outcome of the game.


On August 14th, there was widespread discussion as the US government moved Bitcoin seized from the infamous Silk Road to Coinbase Prime. According to blockchain analysis firm Arkham, this transfer involved 10,000 Bitcoins worth around $593.5 million, which are typically used by institutional investors on this platform.

Per Arkham’s post on X: 10,000 Bitcoins worth approximately $593.5 million that were initially stored in the Silk Road have now been transferred to Coinbase Prime. The wallet identified as bc1ql received this large amount of Bitcoin from a recognized US Government wallet around two weeks ago. More recently, these Bitcoins have been forwarded to the deposit wallet 33J, which is associated with Coinbase Prime.

Is The US Gov Selling Bitcoin?

Following the June announcement by the United States Marshals Service (USMS), which is part of the Department of Justice, about its new partnership with Coinbase Prime to manage their large-cap digital assets, there has been debate within the community as to whether this move indicates a sale of Bitcoin or simply a transfer for custody purposes. Consequently, some have conjectured that the U.S. government is not selling these assets.

On the other hand, Scott Johnsson, a finance attorney and partner at Van Buren Capital, presented an opposing perspective today, suggesting that this deal signifies the unquestionable disposal of the confiscated assets by the U.S. administration. In his words:

“Indeed, it appears that the United States Marshal Service (USMS) might be offloading the Bitcoin associated with Silk Road. This is because the USMS has been transferring these Bitcoins to a specific wallet, as stipulated in their service agreement. Since this agreement mandates that all USMS assets must remain separate, any future transfers to CB Prime or other mixed exchange wallets suggest that the USMS has likely already sold, or will do so very soon.”

As a crypto investor, I reinforced my argument by citing two crucial pieces of information: the DOJ’s Office of Inspector General (OIG) report and the Request for Proposal (RFP) for crypto services. These documents underscore two important aspects – first, that assets must be swiftly liquidated within five business days following seizure to avoid being mixed with other assets, which is achieved through separate wallet addresses. Second, they highlight the necessity of rapid asset liquidation upon forfeiture.

The U.S. Marshals Service plans to handle this matter by employing a contract for cryptocurrency services. This contract obliges the service provider to convert (liquidate) the seized cryptocurrency within five business days after it’s been forfeited.

Johnsson expects that it may be some time before these sales are officially confirmed, possibly not until the DOJ’s Asset Forfeiture Program FY2024 report is published in January. Yet, as more information becomes accessible through authorized sources or observable changes in assets, there could be hints of what’s to come earlier on.

The official confirmation is expected to be made no later than when the Department of Justice (DOJ) releases its Asset Forfeiture Program FY2024 report in January, and possibly even before that. It’s worth noting that this seems to have started in earnest following President Trump’s speech.

As an analyst, I acknowledged the confusion among users on platform X concerning my analysis regarding Johnsson’s coins. Rodeo posed a question: “It was stated that these coins were supposed to be sold by the end of last year. You’re suggesting that simply transferring these coins from their current address to Coinbase constitutes selling, since Coinbase addresses aren’t entirely separate?”

As a crypto investor, I’d like to address some concerns that have been raised: While it’s not solely Coinbase at fault (there’s an intermediate segregated custody step involved), when they start moving funds into shared wallet addresses, it’s reasonable to suspect those coins might be sold. Moreover, there was a queue of seized Bitcoins that were supposed to have been sold earlier. It seems that finalizing the service agreement may have contributed (at least in part) to the delay.

As a crypto investor, I’ve been closely watching recent developments regarding Bitcoin (BTC). Just a few weeks ago, the proposal by Republican presidential candidate Donald Trump at the Bitcoin 2024 conference to create a “strategic national Bitcoin stockpile” caught my attention. This was followed by whispers that Democrats, led by Kamala Harris, might seize upon this opportunity and liquidate the BTC holdings of the US government through confiscations.

At press time, BTC traded at $59,336.

Silk Road Bitcoin Are ‘Almost Certainly’ Sold By US Gov, Claims Lawyer

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2024-08-16 18:05