Dump Incoming? US Government Moves Another 9,000 BTC From Silk Road

Blockchain data shows that the Department of Justice (DOJ) is moving another massive batch of seized Bitcoin (BTC) connected to Silk Road – the defunct darknet marketplace launched by Ross Ulbricht in 2011.

The government has already confirmed plans to sell its Silk Road-related BTC throughout the year, meaning the latest transfers could signal its intention to soon dump more.

Silk Road Sale: Round 2

As tweeted by Wu Blockchain on Wednesday, two Silk Road BTC addresses suspected to have been seized by the Justice Department moved over 9,825 BTC in aggregate in the past 24 hours. The first moved ~825 BTC, while the second moved ~9000 BTC.

Previous movements from these wallets were seen in March when the second wallet sent over 9,800 BTC to Coinbase, where it was later sold. Both addresses now hold 0 BTC, with the remaining ~30,174 BTC from Silk Road sitting at a third address, from which they still haven’t moved.

The 9,825 BTC moved on Wednesday are currently worth $300 million – up roughly 50% in value from September 7, when the department initially announced that it had seized the 51,351 BTC. At the time, the DOJ indicted James Zhong for hacking Silk Road back in 2012 and creating nine accounts to hide his identity and trigger the release of all Bitcoin from the marketplace

The government later announced that it sold 9,861 BTC on March 14, 2023, for an average price of $21,877. Many in the crypto community mocked the government following the reveal given that Bitcoin’s price had already surged roughly 25% since the actual sale and that it had paid $215,000 in transaction fees alone.

The DOJ’s only financial seizure larger than Silk Road relates to another crypto hack. Early last year, authorities claimed 119,754 BTC related to the 2016 Bitfinex hack, worth $3.6 billion at the time.

Total Bitcoin Held By USG

In total, data from Glassnode shows that the government held 204,013 BTC prior to its most recent wallet transfers. This makes it the largest known individual holder of Bitcoin (excluding exchanges and custodians that hold BTC on behalf of thousands of customers).

It’s unclear if an upcoming BTC sale with heavily impact the market. Data from CoinGecko shows that Bitcoin’s daily trading volume is over $12.7 billion, meaning the market may be able to absorb the sale without significant trouble.

It’s also unclear if the coins will be sold all at once or in smaller batches over the course of a few weeks, the latter of which would have an even smaller impact. In a Glassnode report this week, the firm explained that Bitcoin’s price had formed a “firm foundation” under $30,000 based on the number of coins traded in that price region.