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Maria Hover
Maria Hover

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Bitcoin falls after U.S. sends $240M worth of Silk Road-related BTC to Coinbase

Bitcoin fell after the U.S. government transferred $240 million worth of Bitcoin (BTC) seized from the Silk Road dark web marketplace to a Coinbase Prime address. According to Arkham Intelligence, the 3,940 BTC sent to Coinbase were originally forfeited from Silk Road vendor and narcotics dealer Banmeet Singh following his trial in January 2024.

This is not the first time the U.S. government has moved large amounts of seized Silk Road BTC. In late 2022, authorities confiscated around 50,000 BTC tied to the Silk Road website. The most recent major transfer before this was in April 2024, when the government shifted $2 billion worth of BTC, which also impacted the market.

The U.S. government holds significant quantities of Bitcoin acquired through seizures and asset forfeitures, with an estimated 213,546 BTC valued at approximately $13.07 billion. Coinbase Prime has become the preferred platform for these government liquidations.

Immediately after the news broke, Bitcoin dropped to a low of $60,800 before slowly recovering to around $62,000. The overall cryptocurrency market also experienced a modest decline following the Wednesday transaction.

Trader concerns have been heightened by the potential for a government sell-off, especially after rumors that the German government was liquidating its estimated $2.76 billion worth of Bitcoin holdings. The Mt. Gox bankruptcy estate's plans to compensate victims by dumping 140,000 BTC has also contributed to selling pressure.

Coinbase, the exchange used for the government's Bitcoin transfers, has faced regulatory scrutiny itself. The SEC charged Coinbase with operating an unregistered securities exchange and acting as an unlicensed broker-dealer under chair Gary Gensler. Coinbase has denied the allegations and is contesting them in court, arguing that the SEC has failed to provide clear regulations for crypto businesses.

The Silk Road marketplace, created by Ross Ulbricht in 2011, remains a significant part of Bitcoin's history. The FBI shut down Silk Road in 2013 after arresting Ulbricht. The U.S. government's continued seizures and liquidations of Silk Road-related Bitcoin serve as a reminder of the illicit activities that once plagued the early days of cryptocurrency.

As the government offloads more seized BTC, it will be crucial to monitor the market's reaction and the potential impact on Bitcoin's price. The combination of government sell-offs, regulatory uncertainty, and ongoing legal cases related to Silk Road could contribute to increased volatility in the crypto market in the coming months.

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