Seized Silk Road Bitcoin Moves Following 2021 Zhong Investigation

The United States government has moved over $1.9 billion worth of Bitcoin seized from the Silk Road marketplace to a Coinbase Prime wallet. The transfer, which took place on December 2, 2023, involved around 19,800 BTC, valued at $94,169 per coin at the time.

Silk Road and the Zhong Case

The Bitcoin was originally seized in 2021 during an investigation into James Zhong, who was convicted of wire fraud related to Silk Road, an online marketplace notorious for facilitating illegal transactions. Zhong had illicitly obtained the funds, which were found in a wallet tied to a single-board computer hidden inside a popcorn tin under blankets. At the time of the seizure, the US authorities had confiscated over 50,000 BTC from Zhong, a portion of which is still held by the government.

The US Marshals Service, responsible for managing seized assets, has since transferred portions of the Bitcoin to different wallets, with an estimated $18 billion in Bitcoin remaining under government control.

Speculation Over Government’s Strategy

The rationale behind the latest transfer to Coinbase Prime remains unclear, leading to speculation about the government’s future plans for the funds. Some have suggested that US lawmakers may consider creating a “strategic Bitcoin reserve,” a proposal backed by figures like Senator Cynthia Lummis and President-elect Donald Trump.

In July 2023, the US Marshals Service announced a partnership with Coinbase Prime to handle the custody of assets related to criminal investigations. Coinbase continues to face scrutiny from the US Securities and Exchange Commission (SEC), which filed a civil suit against the exchange in June 2023.

Legacy of Silk Road

The Silk Road marketplace, which was shut down in 2013, allowed users to trade illegal items using cryptocurrency. Its founder, Ross Ulbricht, was sentenced to life in prison without parole in 2015. Since the 2024 US election, many in the crypto community have called for Ulbricht’s sentence to be commuted, with President-elect Trump previously expressing support for such a move.