key takeaways
- The US government has begun liquidating the bitcoin it seized from Silk Road exploiter James Zhong.
- The Justice Department already sold 9,861 BTC on March 14, netting $215.5 million.
- He plans to sell the remaining 41,490 BTC in four installments throughout the year.
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On-line analysts noted earlier this month that the US government was moving funds it had seized from Silk Road exploiter James Zhong. It turns out that the Department of Justice was maneuvering to sell part of the stash.
Dumping Silk Road Bitcoin
The United States government is selling some of its bitcoin holdings.
A new presentation from the United States Department of Justice indicates that part 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 about $1.4 billion at current 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 Justice Department more than $215.5 million. The filing states that the government paid approximately $215,738 in fees for the transaction. He plans to sell the remaining 41,490 BTC ($1.1 billion) in four more installments over the course of the calendar year, although he will wait until Zhong’s judgment to liquidate the second batch.
Zhong is accused of defrauding the Silk Road darknet marketplace by exploiting the platform’s withdrawal mechanism in September 2012. US authorities managed to seize Zhong’s stash of 50,676 BTC in November 2021. Zhong pleaded guilty to a wire fraud charge in November 2022. Although he faces up to 20 years in jail, he recently asked the court to pardon his prison time due to his difficult childhood, his autism, and the fact that his crime was victimless. . His sentencing is scheduled for April 14.
It is very likely that the government used Coinbase to sell its 9,861 BTC. On-chain analysts noticed As of early March, the wallets associated with the seized Silk Road funds had moved approximately 49,000 BTC to various new addresses. One of these addresses was identified as belonging to the Coinbase cryptocurrency exchange; 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 article owned BTC, ETH, and various other crypto assets.
