US Government Selling 50K Silk Road BTC In 5 Rounds in 2023
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US Government Selling 50K Silk Road BTC In 5 Rounds in 2023

US authorities already sold 9,861 Bitcoin and will sell more than 41,000 before the end of the year.
Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.

A filing from Friday, March 31st, revealed that the US government sold just under 10,000 BTC for almost $216 million two weeks prior, and has plans to sell another 41,000 of the cryptocurrency before the end of the year. The Bitcoin was seized from James Zhong who took the cryptocurrency from Silk Road in 2012 and pleaded guilty to wire fraud.

US Government Sells BTC Worth $260M, Plans to Sell More in 2023

In a document filed this Friday, the US authorities revealed they had sold nearly 10,000 Bitcoin for more than $216 million on March 14th. Furthermore, the government revealed it still has about 41,000 of the cryptocurrency which they are expecting to sell in four more rounds before the end of 2023. The BTC in question was seized as part of the arrest of James Zhong who pleaded guilty to wire fraud committed in 2012 several months ago.

The news that a great amount of Bitcoin will be offloaded onto the open market had no immediate bearing on the price of the world’s largest cryptocurrency. Throughout Friday’s trading, BTC maintained a relatively stable price of $28,500. Similarly, the government’s sale of the cryptocurrency on March 14th didn’t impact its price in any significant way.

Interestingly, due to the sheer amount of Bitcoin yet to be sold, Tron’s Justin Sun offered to buy the remaining 41,000 BTC over the counter from the government at a 10% discount to “minimize the potential impact on the market”. Sun is relatively well-known for making similar offers. As recently as March 19th, he also offered to acquire the since-failed Credit Suisse for $1.5 billion and integrate it into the cryptocurrency ecosystem. Last week, Sun has been charged for “touting” unregistered securities and for wash trading by the SEC.

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How Did US Authorities Get The 50,000 BTC?

On November 7th, 2022, Damian Williams, the United States Attorney for the Southern District of New York, revealed that James Zhong pleaded guilty to wire fraud committed in 2012 on the dark web marketplace Silk Road. At the same time, the Department of Justice announced it had seized more than 50,000 Bitcoin Zhong gained by exploiting glitches in Silk Road’s systems.

According to the release, the government got a hold of the cryptocurrency already in 2021 while searching Zhong’s Georgia home. In today’s filing, the authorities are recommending, in addition to the seizure of “ill-gotten gains”, a two-year prison sentence for the defendant stating that such a verdict would send a strong signal to criminals:

On these unique facts, a sentence of imprisonment, but below the Stipulated Guidelines Range and below Probation’s recommended sentence of 24 months, would be appropriate and just. Such a sentence would appropriately credit Zhong for surrendering to the Government access to his substantial crime proceeds and recognize the other mitigating factors discussed above. At the same time, the requested period of incarceration would also avoid minimizing the seriousness of Zhong’s long-running conduct and would send a message to would-be cyber criminals that time in prison—and not merely being asked to give up whatever is left of their ill-gotten gains—is the likely consequence of criminal conduct.

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Do you think the other four sales of the seized Bitcoin will have an effect on its price? Let us know in the comments below.