Bitcoin fell 2% after the US government transferred 3,940 bitcoins seized from a Silk Road vendor.
Bitcoin (BTC) has come under selling pressure after the US government transferred $240 million worth of cryptocurrencies to a Coinbase Prime address. Arkham Intelligence said the 3,940 BTC sent to Coinbase were originally seized from Silk Road seller and drug dealer Banmeet Singh in a trial in January.
Silk Road was a dark web marketplace created by Ross Ulbricht in 2011. The FBI arrested Ulbricht in 2013 and shut down Silk Road. Later, in 2022, US law enforcement authorities confiscated about 50,000 Bitcoins. The authorities also seized Silk Road BTC on several occasions.
A wallet linked to US authorities moved $2 billion in Bitcoin on April 2, sparking similar speculation about a sale at the time. After Wednesday’s transaction, the overall cryptocurrency market declined modestly, along with Bitcoin.
Government takes advantage of lawsuit against exchange to sell Bitcoin
In March 2023, the US government offloaded $216 million in bitcoin onto Coinbase’s institutional platform, Coinbase Prime. The exchange is the preferred vehicle for government liquidation, but regulators have scrutinized Coinbase for violations and illegal trading behavior.
Under Chairman Gary Gensler, the Securities and Exchange Commission (SEC) charged Coinbase with operating an unregistered securities exchange and an unlicensed broker-dealer.
Coinbase denied the allegations and launched its own counterargument in court, accusing the SEC of depriving cryptocurrency companies of clear rules and registration processes. As Coinbase and the SEC settled a legal dispute, the platform continued to serve demand from the US government associated with the sale of Bitcoin.