Bitcoin from ‘Silk Road’ Sent to Exchange Deemed ‘Illegal,’ Angering Crypto Advocate
Cryptocurrency advocate John Deaton, known for his support of Bitcoin and XRP, recently expressed his views on a significant Bitcoin transaction involving the U.S. government and the Coinbase exchange. The transaction, amounting to a quarter-million USD worth of Bitcoin, originated from funds seized in 2013 from the Silk Road dark web marketplace following its closure and the arrest of its founder, Ross Ulbricht.
Deaton criticized the inconsistency between this transaction and the Securities and Exchange Commission’s (SEC) stance on Coinbase, which the SEC had labeled as engaging in illegal activities related to trading unregistered securities. This clash of actions led to Coinbase filing a lawsuit against the SEC. Despite this legal battle, the U.S. government proceeded to transfer 3,940 BTC, valued at approximately $241.22 million, to Coinbase for sale. These funds were initially confiscated from a Silk Road drug trafficker and forfeited during a trial in January 2024.
Deaton condemned the government’s actions as contradictory, allowing regulatory authorities like Gary Gensler and Senator Warren to oppose the crypto industry while utilizing the services of Coinbase Prime, the largest U.S.-based crypto exchange. Notably, a similar sale occurred in March of the previous year when the U.S. government sold 9,861 coins for $216 million.
Following this transaction, the U.S. government still holds 213,546 BTC, amounting to over $13 billion, confiscated from the Silk Road. Despite the founder of CryptoQuant suggesting that the recent sale would have minimal market impact, Bitcoin prices experienced a temporary decline of 1.76%, dropping from $61,778 to $60,688. However, the cryptocurrency has since rebounded and is currently trading at $61,260.
The controversy surrounding the U.S. government’s actions highlights the ongoing tensions between regulatory bodies and the cryptocurrency industry. Deaton’s criticism underscores the complexities and contradictions inherent in the evolving relationship between government authorities and the crypto market. The implications of such transactions on market dynamics and regulatory enforcement continue to be subjects of debate within the crypto community.
