In a legal document filed on Friday, the US government says that more than $215 million worth of Bitcoin was sold in March, which amounts to nearly 9,900 BTC. These assets were actually seized from James Zhong, who exploited a loophole in Silk Road, a dark web marketplace.
US government sells bitcoin
At the beginning of March, we highlighted movements on a Bitcoin (BTC) address associated with the US government, which suggested a massive sell-off to come. It turns out that according to a legal document filed Friday in court for the Southern District of New York, 9,861.17 BTC were actually sold from March 14th.
After transaction fees are deducted, this operation brought in just over $215.5 million for the United States government.
For the action of this price selloff, it’s worth noting who if it could be causing the wick on the March 14th candle, Bitcoin quickly resumed the upward path and is still trading above $28,000 as of this writing:
BTC price showing the sale made by the US government
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BTC linked to Silk Road
These bitcoins were seized as part of of a case related to the Silk Road marketplace, which operated on the dark web. However, this does not directly concern the illegal activities that were taking place on this platform.
In reality, this court case relates to James Zhong who, in September 2012, managed to exploit a loophole in the Silk Road deposit and withdrawal system. Through 9 different accounts and over 140 transactions, the person made deposits only to withdraw far more than that deposit value moments later.
The legal document explains for example that on September 19, 2012, James Zhong deposited 500 BTC in one of said accounts, before initiating 5 withdrawals of 500 BTC each, less than 5 seconds later, creating a profit of 2000 BTC. . To put events into context, the price of Bitcoin was around $12.5 that day. These are approximately 50,000 bitcoins that were stolen like this.
The memorandum explains in particular that if the activities of Silk Road were certainly illegal, the theft is not justified. Despite several extenuating circumstances, 24 months in prison were thus required against James Zhongand the sentence must be pronounced on April 14.
Regarding this file, the US government still has just under 41,500 BTC, which is currently worth around $1.18 billion. This balance should be sold in 4 lots throughout this year.
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Sources: Memorandum, TradingView
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I timidly discovered the world of blockchain at the end of 2018 during my quest for financial freedom. Initially invested moderately, it was only two years later that I took the gamble of betting everything on the movement that was taking shape then. I then dedicate 2021 to training myself better to acquire more knowledge and seriousness. As I often like to say: I still have a billion things to learn. And what I do know, I want to share with you.
Vincent Mayor
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