There is a special whale on the Bitcoin rich list: the “U.S. government.”
It is currently known to have 3 large Bitcoin addresses, ranking 5th, 8th and 13th on the BitInfoCharts Top 100 Richest Bitcoin Addresses list (the BTC in the 13th-ranked address has been transferred and the ranking has changed), and the total amount of Bitcoin held is approximately 205,539 BTC.
The bitcoins in these addresses are all seized proceeds from illegal activities, involving three cases: Bitfinex hacker, dark web Silk Road, and Silk Road hacker James Zhong.
On March 14 this year, the US government sold part of the bitcoins in one of the addresses, which was worth nearly $300 million. At that time, it caused a fluctuation of about -6% in the entire Bitcoin market. According to the documents, the US government plans to sell the remaining bitcoins in the address again this year. This will become a key event for investors in the near future.
Next, let’s take a look at the current status of the US government’s Bitcoin holdings and predict the timing, quantity, and possible impact of the next large-scale Bitcoin sale by the US government.
Bitfinex hack case address
The address with the largest number of Bitcoins currently held by the US government is: bc1qazcm763858nkj2dj986etajv6wquslv8uxwczt, second only to the cold wallet addresses of Binance, Bitfinex and Robinhood.
The Bitcoin in this address was confiscated from the Bitfinex hacker. On August 2, 2016, Bitfinex was hacked and about 120,000 BTC was stolen. Currently, about 94,643 BTC have been recovered and confiscated by the US government on February 1, 2022 and deposited into this address.
The address has not had any other transaction activity since Bitcoin was deposited on February 1, 2022.
Important address information is as follows:
Balance: 94,643 BTC
Initial active time: February 1, 2022
In and Out Transactions: February 1, 2022 Deposited 94,643 BTC
Dark Web Silk Road Case Address
The second largest address for the US government’s holdings of Bitcoin is: bc1qa5wkgaew2dkv56kfvj49j0av5nml45x9ek9hz6
The bitcoins in this address come from the Bitcoin dark web Silk Road. The US government seized about 69,370 BTC from an unidentified hacker "Individual X". This asset was later confirmed to be related to Silk Road and was deposited into this address in one go on November 4, 2020.
This address has not had any other transaction activity since Bitcoin was deposited on November 4, 2020.
Important address information is as follows:
Balance: 69,370 BTC
Initial active time: November 4, 2020
In and Out Transactions: November 4, 2020 Deposited 69,370 BTC
Silk Road hacker James Zhong case address
The last address of the US government holding a large amount of Bitcoin is: bc1qmxjefnuy06v345v6vhwpwt05dztztmx4g3y7wp
The bitcoins in this address come from the James Zhong Case related to the Silk Road. The US government seized about 51,351 BTC from the Silk Road hacker James Zhong. Of these, 49,825 BTC were transferred to this address. The remaining 1,526 BTC were transferred to another Bitcoin address.
This address is different from the above two addresses in that it has been transferred out many times since the Bitcoin was deposited. The current balance has been cleared.
According to the case documents released by the U.S. District Court for the Southern District of New York on March 31, 2023, the U.S. government has sold 9,861 BTC on March 14, 2023, with a net profit of approximately $215,522,416. The remaining 41,490 BTC will be liquidated by the U.S. government in four batches this year. The liquidation auction will be held publicly at the U.S. Marshals Service. However, the specific time and amount of the liquidation are not yet specified.
Important address information is as follows:
Balance: 49,825 BTC (before) ➡️ 0 BTC (now)
Initial active time: March 26, 2022
In and Out Trades:
March 26, 2022 Deposited 49,825 BTC;
March 8, 2023 9,000 BTC transferred out; 40,000 BTC transferred out;
July 12, 2023 319 BTC transferred out; 506 BTC transferred out;
According to statistics from mempool.space, the two bitcoins transferred on March 8 were transferred to three addresses respectively, including:
9,000 BTC were transferred to a single address at one time. The funds were then combined with the 319 BTC transferred on July 12 and moved multiple times between internal addresses of the US government.
40,000 BTC were divided into 30,175 BTC and 9,825 BTC, which were transferred to two addresses respectively. 9,825 BTC were transferred to Coinbase's address and liquidated together with 36 BTC transferred later (a total of 9,861 BTC). 30,175 BTC were transferred to another address of the US government, awaiting subsequent liquidation.
US Government James Zhong Case Bitcoin Flows
Some predictions
Sales time and amount forecast
According to court documents, the US government has four more plans to sell James Zhong Case's bitcoins this year. From the on-chain data, it is close to mid-September, and the four addresses holding James Zhong Case's bitcoins have not yet had any trading activities. Therefore, we speculate that there are two possible scenarios:
If the original sales plan is maintained, the US government needs to complete four sales in the remaining four months of this year, one each in September, October, November, and December, with an average of about 10,000 each. Based on the previous sales time (2023-03-14), these four sales will most likely be scheduled in the middle of each month, namely September 15, October 15, November 15, and December 15.
If the U.S. government does not conduct the first round of James Zhong Case Bitcoin sales in September, it is likely that the U.S. government will postpone the sales plan for the purpose of stabilizing the market and postpone the full liquidation of the remaining Bitcoins until next year.
Market volatility prediction
On March 8, 2023, the U.S. government made two large Bitcoin transfers, totaling 49,000 BTC to new addresses. This included 9,825 BTC sold to Coinbase. This caused investors to worry about selling pressure on Bitcoin, and the price of Bitcoin fell 6% from March 8 to 10 (starting to rise on March 11). At the same time, the entire crypto market also fluctuated, with all major cryptocurrencies falling to varying degrees. (About 2%-6%)
Therefore, based on the above historical data, we speculate that since the amount of each sale of the remaining part is not much different from that on March 8, the possible fluctuation of Bitcoin price may be around -2% to -6%.
Future sales plan forecast
According to the US government's plan, all the remaining bitcoins in James Zhong Case's address will be sold this year. The next bitcoins that may be sold are likely to come from another address related to the Silk Road. There are two specific reasons:
The bitcoins in this address are also related to the Silk Road case. This case happened nearly 13 years ago, the case is clear, and the main criminal Ross William Ulbricht has agreed to hand over all the bitcoins in this address to the US government for auction.
The Silk Road Case address is the second largest address in the US government that holds bitcoins. After all the bitcoins of James Zhong Case were liquidated, it is undoubtedly the best choice if there is a need to liquidate large amounts of bitcoins.
Summarize
There are three US government Bitcoin addresses that traders should pay attention to: bc1qazcm763858nkj2dj986etajv6wquslv8uxwczt, bc1qa5wkgaew2dkv56kfvj49j0av5nml45x9ek9hz6, and bc1qmxjefnuy06v345v6vhwpwt05dztztmx4g3y7wp
This year, we need to focus on James Zhong Case Address: bc1qmxjefnuy06v345v6vhwpwt05dztztmx4g3y7wp
This year, the US government will liquidate and auction the remaining bitcoins in James Zhong Case's address in 4 batches, totaling about 41,490.72 BTC
The estimated sale time for the remaining bitcoins in the address is Sept.15, Oct.15, Nov.15, and Dec.15, with an average of 10,000/sale
Each sale of the remaining portion may cause a price fluctuation of about -2% to -6% of Bitcoin
The next liquidation address is most likely the Silk Road Case address: bc1qa5wkgaew2dkv56kfvj49j0av5nml45x9ek9hz6
