US Govt Selling Bitcoin?

On Wednesday, August 14, the US government's subsequent transfer of Bitcoin, first taken from the infamous Silk Road, generated a lot of speculative activity.

Finance attorney Scott Johnsson claims that the US Marshals Service (USMS) is likely selling Bitcoin from the defunct Silk Road marketplace.

The claims are based on a servicing agreement that the USMS entered into with Coinbase in June, which Johnsson says would explain the transfer of Bitcoin to Coinbase Prime. If true, the sales could have a major impact on the cryptocurrency market, as the USMS may have either sold or is preparing to sell these assets once the Bitcoin reaches Coinbase Prime.

US Government Selling Bitcoin Again?

On Wednesday, August 14, another transfer of Bitcoin by the US government from the Infamous Silk Road has sparked speculation.

According to analysis from blockchain analytics firm Arkham, on Wednesday, Coinbase Prime, a platform primarily used by institutional investors, received 10,000 Silk Road Bitcoins, currently valued at approximately $593.5 million.

This transaction follows the announcement by the US Marshals Service (USMS), a branch of the Department of Justice, in June that it had chosen Coinbase Prime to provide custody and advanced trading capabilities for the Class 1 (large cap) digital assets of the agency.

The community is torn on whether these actions indicate a sale of the Bitcoin or simply a transfer for custody, with many speculating that the government is not selling.

“Coinbase Prime now has 10,000 Silk Road BTC (worth $593,5M). Two weeks ago, the well-known US government wallet sent 10K BTC to wallet bc1ql. This Bitcoin was recently sent to Coinbase Prime deposit wallet 33J.”

However, managing partner at Van Buren Capital and finance attorney Scott Johnsson offered an alternative perspective on Monday, asserting that the deal represents the final sale of the confiscated assets by the US government.

“Yes, US Marshal Service (USMS) is almost certainly selling Silk Road Bitcoin […]

USMS has been sending BTC to a custodial address required by the terms of the servicing agreement […]

Given the agreement requires USMS assets remain completely segregated, whenever a transfer is ultimately made to CB prime (or other commingled exchange address), you can be sure USMS has already sold or is selling imminently.”

According to Johnsson, the transfer of Bitcoin by the USMS to a custodial address is mandated by this agreement.

The transfer of these funds to a commingled exchange account, such as Coinbase Prime, is a key indication of an impending or finalized transaction, as highlighted by Johnsson. This pattern of transfers suggests that the USMS is actively selling its Bitcoin holdings.

“Not necessarily CB alone (there’s an interim segregated custody step), but once they hit commingled addresses it’s reasonable to infer they’re sold. And yea, there was a backlog of forfeited BTC that was supposed to be sold already. Finalizing the services agreement appears to…”

Interestingly, Johnsson adds that this selling activity has increased following a recent speech by former President Trump, which could indicate a political angle to the timing of these sales.

He points to several court orders and an audit report by the Department of Justice Office of Inspector General that may have set the stage for this action.