Following court approval, the U.S. government will transfer the confiscated Silk Road Bitcoins to the Coinbase exchange.

Recently, a wallet address marked as belonging to the U.S. government on Coinbase Prime (a custodial platform for large clients) received 3,940 Bitcoins (valued at approximately $240 million). These Bitcoins are part of the cryptocurrency assets confiscated by the U.S. government following a hacker incident on the dark web marketplace Silk Road.

The dark web marketplace known as Silk Road was hacked between 2012 and 2013, resulting in the theft of 69,370 Bitcoins. The founder of Silk Road was arrested in 2013 and subsequently sentenced to life imprisonment.

The hacker responsible for stealing these Bitcoins was also arrested, and by 2020, agreed to the confiscation of the seized Bitcoins by the U.S. government. With court confirmation, the U.S. government took control of these Bitcoins.

The transfer of Bitcoins to the Coinbase custodial platform for large clients signifies that the U.S. government might be waiting for an opportune moment to sell them, raising concerns among cryptocurrency investors.

The concern stems from the U.S. government holding such a large amount of Bitcoins, which, if released to the market all at once, could potentially lead to a continued decline in Bitcoin prices. The market would need time to absorb just the 3,940 Bitcoins, not to mention the tens of thousands of Bitcoins still to come.

Coinbase, as a custodial service provider in the cryptocurrency sector, is unlikely to offload all at once. They are expected to wait for a suitable time and price to gradually sell these Bitcoins, as a direct dump would also result in losses for the U.S. government.

Additionally, the scale of Bitcoins seized or confiscated by the U.S. government or other departments is staggering. For instance, 94,000 Bitcoins were seized in connection with stolen funds from the Bitfinex exchange. These Bitcoins are not yet officially considered to be owned by the U.S. government, as their final ownership will be determined after court proceedings and judgments.