US government linked wallets moved $1 billion in cryptocurrency over two days, with 12,267 BTC transferred to unlabeled wallets on October 6-7, 2026. The transfer included approximately $1.01 billion in bitcoin and $119 million in USDT, representing a significant movement of seized digital assets from government custody. This represents a substantial increase from the previously reported $770 million transfer, with the latest data showing the government moved $1 billion worth of cryptocurrency. The transfer followed heavier exchange-bound activity 24 hours earlier, when roughly 3,200 BTC ($264 million) and $119 million in USDT landed at Coinbase Prime deposit addresses. On-chain analysts at EmberCN, Resonance, Arkham, and Lookonchain all flagged the activity as it happened, with the market collectively shrugging off the significant transfer. The coins left a wallet holding funds seized in the 2016 Bitfinex hack and went to new, unlabeled addresses, with no exchange deposit recorded, a pattern more consistent with wallet reshuffling than a sale.
The transfer included approximately 12,267 BTC from the Bitfinex hack recovery case, representing a portion of the 94,643 BTC recovered by federal agents in 2022 after obtaining private keys to a wallet holding part of the stolen funds. The Justice Department stated that Ilya Lichtenstein stole 119,754 BTC from Bitfinex and later attempted to launder the funds through exchanges, mixers and other services. A federal court ordered more than 94,000 BTC returned to Bitfinex as part of restitution proceedings, covering 94,643 BTC and associated forked assets. As per Galaxy Research, the main address containing roughly 94,643 BTC remains unmoved, meaning the latest Bitfinex-linked transfer does not represent the entire recovered balance. The distinction is important because restitution proceedings provide a possible legal reason for moving Bitcoin without violating the Strategic Bitcoin Reserve's no-sale policy.
A March 2025 executive order directs forfeited bitcoin into a Strategic Bitcoin Reserve and states it should not be sold. The government still holds about $25.5 billion worth of crypto, according to Arkham data. The transfer follows a pattern of recent government crypto movements, with CoinDesk reporting that more than $100 million in BTC and BNB moved in a similar fashion. In July, about $288 million in seized bitcoin and ether was routed to Coinbase Prime via fresh intermediary wallets. Deposits to Coinbase Prime don't necessarily indicate a sale because the platform also provides custody services, allowing assets to be held in custody or used for trading operations. There is precedent for such transfers, as in December 2024, the government moved $1.92 billion in Bitcoin, initially sending a $100 test payment before transferring 10,000 BTC to Coinbase Prime.
The $1 billion Bitcoin transfer has raised concerns about potential government selling, with Bitcoin trading near $81,300 on Thursday, down approximately 3% amid the announcement. The cryptocurrency market has been under pressure from rising US Treasury yields and oil prices, making it difficult to attribute the latest losses directly to the government transfers. However, the timing of the transfer coincides with broader market weakness, adding to investor concerns about potential selling pressure. The transfer has no confirmed exchange destination, with Lookonchain tracing the larger transfer to two new addresses holding approximately 6,000 BTC and 6,267 BTC that were not identified as exchanges. Market analysts suggest the movement could represent a custody reshuffle or preparation for another transfer, with precedent from January 2025 when US prosecutors argued seized Bitcoin should be returned to Bitfinex.
