A significant development has emerged in the ongoing saga surrounding the defunct criminal online marketplace Silk Road. On-chain data suggest that a massive amount of funds tied to the marketplace is on the move, with more than 9,000 Bitcoin (BTC) recently transferred from two Silk Road-related addresses. The addresses in question are suspected to have been seized by the US Department of Justice.
US Government BTC On The Move?
The latest transfer of funds follows the seizure of over 50,000 Bitcoin from James Zhong, who recently pled guilty to wire fraud for unlawfully obtaining the Bitcoin from the Silk Road dark web marketplace in 2012. Law enforcement seized the Bitcoin from Zhong’s home in Gainesville, Georgia, in November 2021, in what was the largest cryptocurrency seizure in the history of the US Department of Justice.
According to court filings, Zhong created a string of Silk Road accounts to conceal his identity, triggering over 140 transactions in rapid succession to trick Silk Road’s withdrawal-processing system into releasing approximately 50,000 BTC into his accounts.
He then transferred the Bitcoin into separate addresses under his control, all in a manner designed to prevent detection and obfuscate the Bitcoin’s source.
Zhong’s possession of the 50,000 Bitcoin led to him receiving 50,000 Bitcoin Cash in a hard fork coin split in August 2017. He then exchanged all the BCH Crime Proceeds for additional Bitcoin, amounting to approximately 3,500 Bitcoin of additional crime proceeds. By the last quarter of 2017, Zhong possessed roughly 53,500 Bitcoin of total crime proceeds.
In March 2022, Zhong began voluntarily surrendering to the government additional Bitcoin that he had access to and had not dissipated. In total, he surrendered 1,004.14621836 additional Bitcoin.
The US government had previously sold 9,800 Bitcoin in March 2022, with plans to sell another 41,500 BTC. However, the recent transfer of more than 9,000 BTC from the Silk Road-related addresses has raised questions about the fate of the remaining seized Bitcoin.
Is The Bitcoin Bull Run In Jeopardy?
As previously reported by NewsBTC, the US government plans to sell the remaining 41,500 BTC in connection with the Silk Road case. The US government has been selling the confiscated BTC in batches since then, and the upcoming sale of 41,500 BTC could have a significant impact on the cryptocurrency market.
If there is no demand for Bitcoin when the US government sells the remaining BTC, it could lead to a drop in Bitcoin’s price. This is because the sudden influx of BTC into the market could create an oversupply, which could overwhelm the existing demand. As a result, the market price of BTC could fall, leading to a temporary drop in the cryptocurrency’s value.
However, it’s important to note that the impact of the government’s BTC sale on the market is not entirely predictable. If buyers are willing to purchase the BTC at the offered price, then the market may not experience much volatility.
On the other hand, if demand for BTC is strong and buyers are willing to pay a premium for the confiscated BTC, the sale could push BTC prices higher.
Despite these concerns, BTC appears to be regaining its bullish momentum, attempting to breach the $31,000 mark. If BTC can consolidate above this resistance level, it could signal a potential upward trend in the cryptocurrency’s value.
Currently, BTC is trading at $30,700, which is the same price level as it was in the 24-hour timeframe from July 11th. BTC’s support floor at $30,000 has been holding up well, despite poor price action.
This could serve as a threshold for Bitcoin bulls in case of another failed attempt to breach the upper resistance lines in the short term.
Featured image from Unsplash, chart from TradingView.com