The U.S. government appears to be shuffling $1B worth of Bitcoin among its wallets, including a $217M transfer to crypto exchange Coinbase.

The activity has ignited fears within the community that the move could be a precursor to a sale, which would likely drive down the price of BTC.

Glassnode, an on-chain analytics firm, flagged the transfers on Wednesday. It said that 9,861 BTC were sent to Coinbase. Glassnode added that an additional 40,000 BTC “associated with U.S. government law enforcement seizures” were being sent between wallets controlled by the government.

Six hours later, PeckShield, an on-chain security company, tweeted that the roughly 40,000 BTC had been consolidated into two wallets.

Silk Road Seizure

PeckShield believes that the funds originated from the infamous darknet market, Silk Road, noting that the government seized more than 51,000 BTC between November 2021 and March 2022 from an individual who previously hacked the platform.

Silk Road was the first crypto-powered dark market, hosting eBay-styled listings for all manner of contraband, including narcotics and firearms. Ross Ulbricht launched the platform in 2011, and it shut down in 2013 after Ulbricht’s arrest.

Authorities seized 173,991 BTC at the time, including 144,336 owned by Ulbricht. The government sold those coins in four auctions in 2014 and 2015.

In November 2020, the U.S. Department of Justice filed a civil forfeiture action against a U.S.-based person it claimed was in possession of more than 50,000 BTC they had stolen from Silk Road.

In November 2022, the U.S. Department of Justice said a Georgia man named James Zhong had pleaded guilty to wire fraud. He was sentenced to nine years in prison and forfeited the stash of BTC to the government as part of a plea deal.

Bitcoin is down 7% in the past week.