Key Insights:
- How hackers stole BTC from Silk road.
- U.S. government moves seized BTC from Silk road hackers.
- What is the implication?
BTC makes the headline, again.
The cryptocurrency ecosystem is saturated with the news that the United States Government is about to sell off some of its seized Bitcoin. About ten years ago, some hackers deployed a trading scheme to defraud the Silk Road — an illegal online marketplace — of its Bitcoin.
Since then, the US Government has been looking for every party involved in the fraudulent act. In 2021, the US Government clamped down on one of the wallet owners that received the stolen Bitcoin.
How Hackers Stole Bitcoin From Silk Road
In November 2022, the US Department of Justice announced the clamp down on James Zhong, a crypto fraudster. The DOJ revealed that the US Government had seized over $3.36 billion of Bitcoin.
It said the seized Bitcoin is affiliated with the darknet marketplace Silk Road. Significantly, the DOJ revealed that it was a wire fraud in September 2012.
At that time, a Bitcoin was equivalent to $10. Similarly, it took about ten years to apprehend James Zhong, who received about 50,676 Bitcoin.
According to Damian Williams, the US Attorney for the Southern District of New York, he said, “For almost ten years, the whereabouts of this massive chunk of missing Bitcoin had ballooned into an over $3.3 billion mystery.” He added that they located the funds using “cryptocurrency tracing” and “good old-fashioned police work.”
According to the Department of Justice, the seizure is the second-largest Bitcoin seizure in the agency’s history. The largest was the 2016 Bitfinex hack that led to the loss and eventual takeover of 94,000 Bitcoin.
US Government Moves Seized BTC From Silk Road Hackers
Peckshield, an on-chain security company, claimed that the US Government is moving the seized BTC tokens to various wallets. The report revealed that the US Government had transferred about 49,000 BTC worth about $1.08 billion. Similarly, Glassnode tweeted the development.
According to Glassnode, “approximately 40k $BTC from wallets associated with the US Government law enforcement seizures are on the move.” They revealed that about 9,861 BTC seized from the Silk Road hacker were sent to the Coinbase clutter. Since the news broke out, it has been trailed by speculations.
What is the Implication?
Industry players opined that the movement of the seized asset is an internal transfer. They are routine operations that do not require the selling of assets but rather their redistribution within the company. These people speculated that the US Government might not eventually sell the BTC.
They consider the transfer of the seized assets as part of regular crypto asset management. The rest of the world keenly watches what impact this would have in the crypto space.
