Bitcoin Retreats After US Govt-Linked Wallet Moves Nearly $4M In Seized $BTC

A digital wallet linked to the U.S. government that held Bitcoins seized from a Xanax seller on the darknet has moved all of the account's $BTC holdings, at a time when the cryptocurrency market is still reeling from the aftermath of the German government's massive dump.

Dumping to Coinbase

The wallet, which is labeled as "U.S. Government: Ryan Farace Seized Funds," moved 58.742 Bitcoins worth around $3.96 million to Coinbase Prime on Monday, data from blockchain analytics leader Arkham Intelligence showed.

The wallet's stash had been untouched since the coins were first seized three years ago, as per Arkham data. During the seizure, the assets were worth some $2.89 million, giving the government some $1 million in gains.

Who is Farace?

Earlier this year, the Justice Department said Farace was sentenced to 19 months in federal prison followed by two years of supervised release for "laundering drug trafficking Bitcoin proceeds intended for federal forfeiture."

Farace had already been sentenced to 57 months and an addition three years of supervised release in 2018 for distributing drugs "typically sold under the brand name 'Xanax'" through the dark web "in exchange for Bitcoin." At the time, he was ordered to forfeit some 4,000 Bitcoins he earned from selling the drugs.

Following his 2018 drug trafficking conviction, while serving time, Farace "conspired with his father" to launder some of the proceeds of his crimes, including the transfer of over 2,874 Bitcoins to a third party in August 2020 so the funds can be moved into an offshore bank account, the DOJ said.

In May 2021, law enforcement also seized 58.742 $BTC "that was also proceeds of R. Farace's drug trafficking," the DOJ said.

In the backdrop of German government's dump

It is unclear why the U.S. government moved the seized Bitcoins, but it came just weeks after the German government sold off a total of 49,858 $BTC worth around $2.89 billion. The funds were seized from a movie piracy site.

At the time, there were talks that Germany may have put Bitcoin under a liquidity test to determine whether there was real demand for the world's largest digital asset by market value. Many observers blamed Bitcoin's plunge below $55,000 to the German government's selloff as well as the repayment activities of fallen crypto exchange MtGox.

Bitcoin prices affected?

The world's first decentralized cryptocurrency started the week strong, trading above $67,000 Monday. However, the token has since retreated, starting Tuesday at around $66,000 as per CoinGecko data. It has been down by over 1% in the past 24 hours.