DOJ Liquidates Its Seized Silk Road Bitcoin Stash
Important takeaways
- The US government has begun liquidating the bitcoin it seized from Silk Road exploiter James Zhong.
- DOJ already sold 9,861 BTC on March 14, giving $215.5 million.
- It plans to sell the remaining 41,490 BTC in four installments over the course of the year.
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On-chain analysts noticed at the beginning of the month that the US government was moving funds it had seized from Silk Road exploiter James Zhong. Turns out the DOJ was maneuvering to sell some of the hold.
Dump Silk Road Bitcoin
The US government is selling some of its bitcoin holdings.
A new filing from the US Department of Justice indicates that some of the bitcoin seized by authorities from Silk Road exploiter James Zhong has already been sold.
According to the document, the government at one point held a total of 51,351 BTC (worth roughly $1.4 billion at today’s prices) in connection with Silk Road — most of which came from Zhong. Of these holdings, 9,861 BTC were sold on March 14, netting the DOJ over $215.5 million. The filing says the government paid approximately $215,738 in fees for the transaction. It plans to sell the remaining 41,490 BTC ($1.1 billion) in four more installments over the course of the calendar year — though it will wait until Zhong’s ruling to liquidate the second batch.
Zhong is accused of defrauding the Darknet marketplace Silk Road by exploiting the platform’s withdrawal mechanism in September 2012. US authorities were able to seize Zhong’s stash of 50,676 BTC in November 2021. Zhong pleaded guilty to one count of wire fraud in November 2022. Although he faces up to 20 years in prison, he recently asked the court to spare him prison time because of his difficult childhood, autism and the fact that his crime was victimless. He is scheduled for sentencing on April 14.
It is highly likely that the government used Coinbase to sell its 9,861 BTC. Analysts in the chain noticed in early March that wallets associated with seized Silk Road funds had moved approximately 49,000 BTC to various new addresses. One of these addresses was identified as belonging to the crypto exchange Coinbase; it received 9,825 BTC on March 7.
The DOJ’s use of Coinbase is atypical, as the government has historically preferred to liquidate seized digital assets through public auctions.
Disclosure: At the time of writing, the author of this piece owned BTC, ETH and several other crypto assets.
