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Post-Silk Road, US Government Makes $215M from Seized BTC – With Plans for $1.1B More

The seized Bitcoin was originally stolen from darknet marketplace Silk Road by hacker James Zhong.

While people are uncertain about the crypto market today, there’s a few who are still making profits from Bitcoin sales. Included in the few? The US government.

According to recent court documents, the US federal government sold crypto to amounts worth over $215 million earlier in March, and they have more.

“On March 14, 2023, the Government sold 9,861.1707894 BTC (of the 51,351.89785803 BTC) for a total of $215,738,154.98. After $215,738.15 in transaction fees, the net proceeds to the Government were $215,522,416.83.”

But where did all of this crypto come from? 

According to US prosecutors, hacker James Zhong had confessed to stealing the funds from the Silk Road darknet marketplace. In November 2022, US cops announced that they seized over $3.36 billion worth of Bitcoin (value at the time), making it the second-largest Bitcoin seizure of all time. 

Now, the US government is in the process of selling the seized Bitcoin – with 41,490 left, worth $1.1 billion – and is planning to get rid of all of it.

“With respect to the 51,351.89785803 Bitcoin forfeited in the Ulbricht case before Judge Schofield, the Government has begun liquidating (selling) it,” Friday’s document read.

The “Ulbricht case” refers to the high profile case of Silk Road founder Ross Ulbricht, who was sentenced to life in prison in 2015. Ulbricht ran the Silk Road online black market where its users primarily bought and sold illegal drugs before its shutdown in 2014 by authorities.

Last year, James Zhong pleaded guilty to wire fraud after the US government alleged he manipulated the Silk Road transaction system to pocket 50,676 Bitcoin in 2012. Ten years ago, one Bitcoin was worth roughly $10.

“The defendant had in his possession multiple computer servers, virtual private networks, among other things, enabling him to commit the offence,” prosecutors added in Friday’s filing. “He then managed to keep the Bitcoin protected, and his identity hidden for several years.”

As for the US government’s plans with the remaining Bitcoin – they’re planning to get rid of it in four different batches. But what kind of effect would that have on the world’s biggest digital asset, its prices, and its scarcity, in an uncertain market?

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