US government moves $470 million in seized crypto to Coinbase wallets, raising Bitcoin sale questions

Overview

The US government has moved $470 million in seized crypto to likely Coinbase Prime addresses, raising questions over potential Bitcoin sales.

Background

The transfers include Bitcoin, wrapped Bitcoin, and USDT, linked to seizures involving the 2016 Bitfinex hack and Alameda Research.

Scrutiny

The destination puts the transaction under greater scrutiny after the Trump administration pledged to retain Bitcoin placed in the US Strategic Bitcoin Reserve and federal officials rejected claims of quiet sales.

Implications

The latest movement raises concerns over whether the government is following its own accumulation policy.

Legal Context

The policy, however, leaves room for some government-controlled crypto to move out of federal hands. Trump's order permits digital assets to be disposed of when required by a court or law, and when officials determine that assets or their proceeds should be returned to verified crime victims, used for law-enforcement purposes or applied toward other statutory forfeiture obligations.

Asset Origin

The government seized about 95,000 Bitcoin in 2022 from wallets controlled by Ilya Lichtenstein and Heather Morgan as part of the investigation into the Bitfinex hack. Lichtenstein later admitted to hacking the exchange, where about 119,754 Bitcoin were stolen in 2016. Authorities subsequently seized another roughly $475 million in assets tied to the theft.

Potential Outcome

A confirmed sale of Bitcoin deposited into the Strategic Bitcoin Reserve, outside the order's exceptions, would reopen questions over whether federal agencies are following the administration's accumulation policy.