US seizes $1.9 billion from Silk Road, deposits it in Coinbase wallet

The US government has deposited more than $1.9 billion in Bitcoin that it requisitioned from the Silk Road marketplace into a Coinbase wallet, Cointelegraph reported.

Data from Arkham Intelligence shows the federal government moving about 19,800 Bitcoin – equivalent to $1.9 billion – into a Coinbase Prime wallet. The Bitcoin came to the government in 2021 as a result of a seizure of funds from James Zhong, who was later found guilty of committing wire fraud as part of the Silk Road marketplace scheme.

The Department of Justice announced in 2022 that it had taken more than 50,000 Bitcoin from Zhong, including those it found in a wallet “on a single-board computer that was submerged under blankets in a popcorn tin.” The feds have deposited much of the Bitcoin into separate wallets but withheld about $18 billion of the cryptocurrency.

It’s not known if the gradual transmission of the currency represented a plan to trade or sell the coins. Sen. Cynthia Lummis (R-WY) and President-elect Donald Trump are backing a legislative vision that would create a “strategic Bitcoin reserve” in the US.

The US Marshals Service, which is tasked with the seizure of cryptocurrencies and other financial dividends of criminal acts, is committed to working with Coinbase Prime as the financial facility responsible for guarding seized assets. Coinbase is in the midst of a lawsuit that originated from the US Securities and Exchange Commission in June 2023.

The Silk Road was a black market criminal enterprise that allowed users to buy products anonymously, including weapons, drugs, stolen credit card information and other illegal items with cryptocurrency. The racket was created by Ross Ulbricht, who received a sentence of life in prison in 2015, according to Cointelegraph.