Silk Road Bitcoin Sent to Exchange Deemed ‘Illegal,’ Crypto Advocate Outraged

Cryptocurrency advocate John Deaton, a supporter of various digital currencies, recently shared his perspective on a significant Bitcoin transaction involving the U.S. government, which transferred approximately $241 million worth of Bitcoin to the Coinbase exchange. This Bitcoin was part of assets confiscated in 2013 from the Silk Road, a dark web marketplace that was shut down, leading to the arrest and subsequent sentencing of its founder, Ross Ulbricht, to two life terms in prison.

Deaton expressed his concern that this transaction contradicts the recent stance taken by the U.S. Securities and Exchange Commission (SEC), led by chairman Gary Gensler, who has labeled Coinbase’s operations as illegal due to the trading of certain altcoins, which he categorizes as “unregistered securities.” In June of the previous year, the SEC initiated legal action against Coinbase in response to these claims. In retaliation, Coinbase filed a lawsuit against the commission.

Notably, the U.S. government’s recent transfer included 3,940 BTC, forfeited during a trial in January 2024 and previously seized from a Silk Road drug trafficker. Deaton criticized this action, describing it as “nonsense” from government officials who publicly oppose the cryptocurrency industry while simultaneously utilizing services from Coinbase, the largest crypto exchange in the U.S. This was not the first such transaction; a similar sale occurred in March of the previous year where the government sold 9,861 Bitcoin for around $216 million.

Following the announcement of this transaction, it was reported that the U.S. government retains 213,546 BTC from the Silk Road seizures, representing over $13 billion in assets. Despite the sale, some industry observers, including the founder of the on-chain data aggregator CryptoQuant, believe it will have minimal impact on Bitcoin’s market price. However, the transaction coincided with a slight decrease in Bitcoin’s value, with the cryptocurrency dropping by 1.76% from approximately $61,778 to around $60,688. As of now, Bitcoin has made a slight recovery, trading at $61,260.