U.S. Government Shifts $470 Million in Seized Crypto to Coinbase Prime, Renewing Sale Concerns

According to blockchain analytics firm Arkham, the U.S. government transferred approximately $470 million in seized digital assets to addresses associated with Coinbase Prime, sparking renewed speculation regarding potential liquidation.

On October 7, Arkham Intelligence reported that the transaction bundle included Bitcoin (BTC), wrapped Bitcoin (wBTC), and Tether (USDT).

The firm traced these assets to seizures connected with the 2016 Bitfinex hack and Alameda Research, the trading entity formerly led by FTX founder Sam Bankman-Fried.

While a sale cannot be confirmed and remains merely a plausible scenario, it is equally probable that the movement reflects internal wallet consolidation or administrative housekeeping.

However, the destination of these funds has placed the transaction under increased scrutiny. This follows the Trump administration’s commitment to hold Bitcoin allocated to the U.S. Strategic Bitcoin Reserve and earlier federal rebuttals denying claims that seized coins were quietly liquidated.

A previous sale claim ended in a government denial

This recent activity occurs nine months after the U.S. Marshals Service disputed reports alleging Washington had liquidated Bitcoin surrendered during the Samourai Wallet criminal case.

In January, Bitcoin Magazine reported that approximately $6.3 million in Bitcoin, handed to the Justice Department as part of guilty pleas, appeared to have been sold. Senator Cynthia Lummis, a leading congressional proponent of Bitcoin, questioned why the government would liquidate such assets after President Donald Trump directed officials to preserve Bitcoin for the national reserve.

The Marshals Service later confirmed to DL News that it had not sold those BTC, noting that crypto liquidations require a multi-level approval process before forfeited assets can be disposed of.

The matter grew more sensitive following Trump’s establishment of the Strategic Bitcoin Reserve in March 2025. His executive order stipulated that Bitcoin deposited into the reserve “shall not be sold” and must instead be maintained as a U.S. reserve asset.

At the time, the White House argued that premature government Bitcoin sales had already cost taxpayers over $17 billion in foregone value.

Seized Bitcoin does not automatically mean reserve Bitcoin

However, the policy does allow for certain government-controlled cryptocurrency to exit federal custody.

Trump’s order permits disposal of digital assets when required by a court or law, or when officials determine that assets and their proceeds should be returned to verified crime victims, utilized for law-enforcement purposes, or applied toward other statutory forfeiture obligations.

This distinction may be particularly significant for the current transfers.

The government seized approximately 95,000 Bitcoin in 2022 from wallets controlled by Ilya Lichtenstein and Heather Morgan during the investigation into the Bitfinex hack. Lichtenstein subsequently admitted to hacking the exchange, where roughly 119,754 Bitcoin were stolen in 2016. Authorities later seized an additional $475 million in assets connected to the theft.

These assets have been subject to competing forfeiture and restitution claims, meaning their legal treatment may differ from Bitcoin already transferred into the Strategic Bitcoin Reserve.

The FTX collapse also resulted in criminal forfeiture proceedings. The judge in Bankman-Fried’s case authorized recovered forfeiture funds to compensate victims, introducing another potential dimension of victim repayment regarding the recent movements.

Consequently, Wednesday’s transaction serves as a test regarding how much can be inferred from government wallets alone.

A confirmed sale of Bitcoin held within the Strategic Bitcoin Reserve, falling outside the order’s exceptions, would reopen questions regarding whether federal agencies are adhering to the administration’s accumulation policy. Conversely, a transfer made for custody, restitution, or another permitted forfeiture purpose would fall into a different category.

For now, Arkham reports hundreds of millions of dollars leaving U.S. government wallets for likely Coinbase Prime deposit addresses. Whether those assets remain in place, shift to new custody arrangements, or are converted into dollars will determine whether this transaction proves to be another false alarm regarding government Bitcoin sales or the initial indicator of a significant new disposal.

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