Around 9,800 Silk Road bitcoin starts moving in unconfirmed transactions

Quick Take

  • Funds tied to the Silk Road marketplace and in possession of the U.S. government have started moving.

Around 9,800 bitcoin tied to the Silk Road is on the move, according to two unconfirmed transactions. That would be the largest movement of funds linked to the now shuttered darknet marketplace in months.

Out of the total, 8,200 bitcoin is being transferred to new wallets. The remainder is being sent to change wallets, and there's debate over whether that counts as officially moving as these funds may be sent back to their original wallets under new addresses.

In the first transaction, 0.01 BTC is being sent to the wallet 361yog, while 506 BTC is going to a change address. These funds originate from two wallets, primarily this one.

In the second transaction, 8,200 BTC is being sent to the same 361yog wallet, while 1,118 BTC is going to a different change address. The funds originated from this wallet.

A visualization of the second transaction. Image:

Both transactions used the replace by fee function. This is typically used to replace an earlier transaction with one showing a higher fee. It's designed to allow Bitcoin users to speed up their transactions during times of congestion.

The Silk Road bitcoin

The U.S. government seized over 50,000 bitcoin in November 2022 from James Zhong, who pleaded guilty to wire fraud over the hack of the same amount of bitcoin from Silk Road in 2012. Zhong was sentenced in April.

The legal filings, as well as those related to Silk Road founder Ross Ulbricht, contained details of related Bitcoin wallets, enabling blockchain analytics firms to track these addresses.

In June, there was a movement of funds somewhat related to the Silk Road wallets, but it was disputed as to whether the funds were controlled by the U.S. government. The wallet at question was one hop away from wallets cited in legal documents related to the case, and the movement of funds also used the replace by fee option in a similar pattern.

In March, the U.S. government sold 9,861 bitcoin and said it planned to sell the remaining bitcoin in four more batches throughout the year. The government has around 41,490 bitcoin left from the funds it seized in the Zhong case.

The U.S. government appears to have been selling its bitcoin on Coinbase, an exchange that the SEC claims is an unregistered securities exchange.

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