US Government Transfers $470M in Seized Crypto to Coinbase, Sparking Bitcoin Sale Concerns

Months after U.S. officials denied unloading confiscated Bitcoin, the assets were tied by Arkham to the Bitfinex breach and Alameda Research.

Around $470 million worth of confiscated crypto was shifted by the U.S. government toward potential Coinbase Prime addresses, Arkham reported, which has sparked a fresh round of questions concerning possible asset liquidations.

On October 7, blockchain data tracker Arkham Intelligence noted that the transfers involved Bitcoin, wrapped Bitcoin, and USDT, and these movements were highlighted as part of a broader shift in government-held digital assets.

The moved funds were tied by Arkham to past busts linked to the 2016 Bitfinex hack and Alameda Research, which was the trading firm formerly run by FTX creator Sam Bankman-Fried.

Although a sale of the Bitcoin cannot be definitively claimed, it remains a believable scenario, while routine internal wallet maintenance or administrative housekeeping is considered just as probable.

Even so, intense scrutiny was drawn toward the transaction by its final destination, coming after the Trump administration promised to keep Bitcoin held in the U.S. Strategic Bitcoin Reserve and federal officials earlier this year shot down rumors that confiscated coins were being quietly liquidated.

Previous Bitcoin Sale Claim Was Denied by the US Government#

This recent transfer arrives nine months after the U.S. Marshals Service pushed back against reports claiming Washington had liquidated Bitcoin surrendered during the Samourai Wallet criminal case.

In January, a report from Bitcoin Magazine indicated that about $6.3 million in Bitcoin handed over to the Justice Department for guilty pleas was sold, prompting Senator Cynthia Lummis—one of Capitol Hill’s leading crypto backers—to ask why officials would dump the asset after President Donald Trump ordered its retention for the national reserve.

However, the Marshals Service told DL News that those BTC had not been sold, while noting that any future crypto liquidations must go through a multi-step approval process before forfeited assets can officially be disposed of.

Following the establishment of the Strategic Bitcoin Reserve by Trump in March 2025, the matter gained heightened sensitivity, with an executive order stating that Bitcoins deposited into the reserve must not be sold and should be kept instead as a U.S. reserve asset.

At that time, the White House argued that premature government Bitcoin liquidations had cost taxpayers upwards of $17 billion in missed potential value.

Seized Bitcoin Does Not Automatically Become Reserve Bitcoin#

Despite this policy, some government-controlled crypto is permitted by the guidelines to leave federal custody.

Trump’s executive order allows digital assets to be disposed of when a court or law demands it, or when officials decide that holdings must be returned to verified victims, put toward law enforcement, or used to satisfy other statutory forfeiture duties.

That specific nuance is considered especially critical for understanding these most recent transfers.

Back in 2022, approximately 95,000 Bitcoin were seized by the government from digital wallets belonging to Ilya Lichtenstein and Heather Morgan during the investigation into the Bitfinex hack. Lichtenstein later copped to breaking into the exchange, where around 119,754 Bitcoin were stolen back in 2016, and authorities later scooped up another $475 million or so in assets linked to the theft.

Because those holdings are faced with competing forfeiture and restitution claims, their legal handling might differ from Bitcoin already shifted into the Strategic Bitcoin Reserve.

Criminal forfeiture proceedings also kicked off following the FTX collapse, and the judge overseeing Bankman-Fried’s case greenlit the use of recovered forfeiture money to compensate victims—meaning this latest shift is tied to yet another potential victim-repayment angle.

That makes Wednesday’s transaction a real test of what analysts can infer just by watching government wallets.

If a sale of Bitcoin is confirmed within the Strategic Bitcoin Reserve outside of the order’s exceptions, it would reignite doubts about whether federal agencies are actually following the administration’s accumulation policy. Meanwhile, any transfer executed for safekeeping, restitution, or another allowed forfeiture reason would fall into a completely separate category.

Right now, Arkham reports hundreds of millions of dollars leaving U.S. government wallets and heading toward likely Coinbase Prime deposit addresses. Whether those holdings stay put, shift into fresh custody setups, or are converted into cash will decide if this transaction turns into just another false alarm regarding government Bitcoin dumps or signals the start of a major new liquidation.