Wallet possibly associated with Silk Road funds makes small Bitcoin transaction

A wallet potentially connected to a different one named in the forfeiture of funds stolen from the now shuttered darknet marketplace Silk Road has made a small bitcoin transaction.

The wallet in question — beginning with bc1qzd8c — moved 10 BTC to another wallet while sending 1,490 BTC to a change wallet.

A wallet associated with James Zhong, who was convicted for stealing bitcoin from the Silk Road, sent 0.00000547 bitcoin to the bc1qzd8c wallet on April 22, 2022, around the time that control over his funds were handed over to the U.S. government. Other wallets also sent bitcoin to it as part of the same transaction.

Some crypto analytics platforms, including Glassnode, figured that this meant the bc1qzd8c wallet was also under the control of the U.S. government and labelled the funds as such, while Arkham previously connected the walled to the government in a tweet. This led to alerts going out today that the Silk Road funds were being moved, leading to a brief dip in the price of bitcoin.

It’s unclear whether the funds are in the possession of the U.S. government.

Strange movement of bitcoin

After the funds were transferred today, they were then sent to further wallets that contain transactions linked to crypto exchange Coinbase and Gemini, according to Arkham.

There are some strange signs about the way the bitcoin was moved around. The original transaction initially sent just 0.01 bitcoin but then used the replace by fee function to not only increase the fee, but also increase the amount being sent. It’s an unusual practice. 

The U.S. government is among the largest bitcoin whales following the seizure of more than 50,000 bitcoin tied to the now-defunct marketplace in 2021. The holdings have become the subject of intense scrutiny among chain-watchers, and transfers have in the past triggered price action.

Coinbase handles the U.S. government’s bitcoin, The Block has previously reported. The exchange was sued on June 6 by the SEC for allegedly operating as an unlicensed securities exchange.

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