US Government Moves Another $1 Billion in Bitcoin to Coinbase Prime as BTC Drops $4,000

Three-night transfer streak sends 9,000 BTC to Coinbase Prime

On October 8, US government-linked wallets moved over $1 billion in Bitcoin. Galaxy Research flagged the transfer of 12,267 BTC, valued at approximately $1 billion, from a government-controlled address holding assets recovered from the 2016 Bitfinex hack.

Blockchain analyst EmberCN reported that 9,000 BTC, worth about $739 million, had reached Coinbase Prime, Coinbase's institutional trading and custody platform. The Bitcoin first moved to an unidentified intermediary wallet before arriving at the Coinbase address.

What the numbers show

• The October 8 transfer continued three consecutive days of government-linked Bitcoin movements.
• On October 7, government-linked wallets sent approximately 8,428 BTC to Coinbase Prime, following another 834 BTC on October 6.
• Bitcoin's price fell from about $86,500 when the transfers began late on October 6 to around $82,500 on Thursday, a drop of roughly $4,000.
• The October 7 activity was the ninth-largest single-day Bitcoin outflow from identified US government wallets since 2013, and the largest since December 2, 2024.
• Galaxy estimated that government-attributed wallets held approximately 319,086 BTC, down from a peak of 352,587 BTC in August 2024.

Previously unlabeled wallets surface

Galaxy's analysis identified 2,456 BTC originating from wallets not previously classified as government holdings. The firm attributed those assets to US authorities because they followed the same transfer procedures as known government wallets and reached a federal Coinbase Prime deposit address.

That deposit address had received approximately 11,567 BTC since its first recorded use in December 2025. About 6,406 BTC came from identified government wallets, while another 5,160 BTC originated from previously unlabeled addresses. The discovery suggests that publicly labeled government wallets may understate how much Bitcoin the US government controls.

Selling concerns versus custody explanations

The timing of the transfers has raised questions about whether the government intends to sell. However, transfers to Coinbase Prime do not confirm that the Bitcoin was liquidated. The platform provides custody and trading services, meaning assets can be deposited without an immediate sale.

Restitution to victims of the Bitfinex hack is another possible explanation for the movement.

Legal uncertainty over the largest holdings

Galaxy identified two major asset groups within the government's estimated holdings. The first is approximately 94,643 BTC held in a principal wallet containing assets recovered from the Bitfinex hack. The second involves roughly 127,271 BTC associated with LuBian and Cambodian businessman Chen Zhi, for which the Justice Department filed a civil forfeiture complaint in October 2025 seeking permanent confiscation over alleged cryptocurrency fraud and money laundering.

Together, those two groups represent more than 66% of the government's previously estimated holdings. Their legal status differs from Bitcoin definitively available for federal use.

The Bitfinex recovery has faced competing ownership claims. Federal prosecutors initially proposed returning recovered Bitcoin to the exchange through in-kind restitution. However, an April 2025 federal court ruling awarded Bitfinex no direct restitution in the criminal proceedings.

What remains unclear

The government has not confirmed whether these transfers lead to Bitcoin sales. The ultimate disposition of the Bitfinex-related assets depends on ongoing legal proceedings. The full extent of government Bitcoin holdings may be larger than publicly labeled wallets suggest, but no official total has been provided.

Sources

• CryptoSlate