Crypto Figures Slam US Government for Transferring $1.9B in Bitcoin to Coinbase Prime

Highlights:

• The US government recently transferred BTC worth about $1.9B to Coinbase.
• US lawmakers, including Trump and Lummis, propose creating a “strategic Bitcoin reserve.”
• Crypto industry executives quickly criticized the government’s Bitcoin transfer.

Data from blockchain analytics firm Arkham Intelligence reveals that on December 2, a crypto wallet tied to the United States government moved around 19,800 Bitcoin, valued at $1.9 billion, to a Coinbase Prime deposit address. These assets from the Silk Road seizure are legally available for the US to sell. 

ALERT: US GOVERNMENT MOVING $1.92B BTC TO NEW ADDRESS

Address: bc1q0av33ktzrkjps8exjex5gtv98vx225uqmzhspm pic.twitter.com/JSELsjFg5T

— Arkham (@arkham) December 2, 2024

It’s uncertain if moving the coins was part of a strategy to trade or sell them. US lawmakers, including Senator Cynthia Lummis and President-elect Donald Trump, have proposed creating a “strategic Bitcoin reserve” in the US. Community members worry President Biden may sell the US Bitcoin supply before Trump’s inauguration, potentially disrupting plans for a Bitcoin Reserve.

Silk Road Hacker Arrested, Millions in Bitcoin Recovered

The Department of Justice (DOJ) seized more than 50,000 BTC tied to the Silk Road market In 2022. James Zhong, who stole the funds in 2012, was arrested and pled guilty to wire fraud. The DOJ says Zhong used a loophole in Silk Road’s system to steal the Bitcoin. The seizure, valued at $3.36 billion at the time, is one of the largest cryptocurrency recoveries to date. Court records show the government sold part of these assets in March last year. They sold 9,861 BTC for approximately $216 million.

The DOJ plans to sell the rest in four phases throughout the year, but there have been few updates. Last month, the US Supreme Court allowed the BTC seized from the Silk Road to be sold by declining to review a case about its ownership.

The US Marshals Service is responsible for seizing cryptocurrencies and assets in criminal cases. In July, it announced a partnership with Coinbase Prime to simplify the liquidation process, as Coinbase Prime specializes in large-scale institutional transactions. Coinbase is still facing a civil suit filed by the US Securities and Exchange Commission (SEC) in June last year.

Backlashes Over Bitcoin Transfer to Coinbase Prime

Crypto industry executives quickly criticized the US government’s transfer of $1.9 billion of Bitcoin to Coinbase. Some called it a “huge strategic mistake.” Jason Lowery, a United States Space Force engineer, tweeted on Dec. 3, “There is no price where it makes sense for the US to sell any Bitcoin it has under its control.”

He added:

“Remember this post when they inevitably try to justify a new version of EO 6102 to reclaim the Bitcoin they sold off due to their ignorance about the true significance of this technology.”

EO 6102 is an executive order signed by President Roosevelt in 1933. It banned hoarding gold coins, gold bullion, and gold certificates in the US. Coinbase CEO Brian Armstrong agreed, stating that in his opinion, the US government should never sell Bitcoin.

Agreed – the U.S. government should never sell Bitcoin IMO. https://t.co/FYRUh0wp1T

— Brian Armstrong (@brian_armstrong) December 2, 2024

Crypto educator Toby Cunningham commented that if the government sells, the supply will be quickly absorbed. Others joked that Biden would cause as much damage as possible before leaving the office. Bitcoin prices dropped nearly 3% to $94,500 during the transfer. However, the price has since recovered and is trading at around $95,600 as of now.