Key points to remember
- The US government has begun liquidating bitcoin it seized from Silk Road exploiter James Zhong.
- The DOJ has already sold 9,861 BTC on March 14, bringing in $215.5 million.
- He plans to sell the remaining 41,490 BTC in four installments during the year.
Share this article
The network’s analysts noticed earlier this month that the US government was transferring funds it had seized to Silk Road exploiter James Zhong. Turns out the DOJ was maneuvering to sell off some of the stash.
Throw away the silk road bitcoin
The US government is selling some of its bitcoin holdings.
A new file from the United States Department of Justice noted that some of the bitcoins seized by authorities from Silk Road exploiter James Zhong have already been sold.
According to the document, the government at one point held a total of 51,351 BTC (worth approximately $1.4 billion at today’s prices) tied to Silk Road, the majority of which came from Zhong. Of these holdings, 9,861 BTC were sold on March 14, earning the DOJ more than $215.5 million. The filing says the government paid about $215,738 in fees for the transaction. It plans to sell the remaining 41,490 BTC ($1.1 billion) in four more installments within the calendar year, although it is awaiting Zhong’s sentencing to liquidate the second batch.
Zhong is accused of defrauding the Silk Road darknet market by exploiting the platform’s withdrawal mechanism in September 2012. US authorities successfully seized Zhong’s 50,676 BTC stash in November 2021. Zhong pleaded guilty to a count of wire fraud in November 2022. Although he faces up to 20 years in prison, he recently asked the court to spare him a prison sentence, due to his difficult childhood, his autism and the fact that his crime had no victims. He is due to be sentenced on April 14.
It is highly likely that the government used Coinbase to sell its 9,861 BTC. On-chain analysts REMARK By early March, wallets associated with funds seized from Silk Road had moved approximately 49,000 BTC to various new addresses. One of these addresses has been identified as belonging to the Coinbase crypto exchange; he received 9,825 BTC on March 7.
The DOJ’s use of Coinbase is atypical, as the government has always preferred to liquidate seized digital assets through public auctions.
Disclosure: At the time of writing this article, the author of this article owned BTC, ETH, and several other crypto assets.