US government moves another $1 billion in Bitcoin as BTC slides $4,000

Wallets linked to the US government transferred more than $1 billion worth of Bitcoin on Oct. 8, coinciding with a drop in BTC prices and additional coins arriving at Coinbase Prime.

On Oct. 8, Galaxy Research noted the transfer of 12,267 BTC, valued near $1 billion, originating from a government-controlled address containing funds recovered from the 2016 Bitfinex hack.

The cryptocurrency first shifted to an unverified intermediary wallet before blockchain analytics firm EmberCN reported that 9,000 BTC, valued at approximately $739 million, arrived at Coinbase Prime, which serves as Coinbase’s institutional custody and trading platform.

These transactions marked three consecutive days of government-associated Bitcoin activity that coincided with a price drop of roughly $4,000 for the cryptocurrency. According to EmberCN, Bitcoin’s value dropped from about $86,500 when the transfers kicked off late on Oct. 6 to approximately $82,500 by Thursday.

At the same time, the timing of these actions has sparked fresh concerns regarding potential government sell-offs.

Nevertheless, moving funds to Coinbase Prime does not prove that the Bitcoin was sold off or that the transfers directly drove the price downward. Because the venue offers trading and custody capabilities, digital assets can be deposited without triggering an immediate sale.

Government transfers expose previously unidentified Bitcoin holdings

The Oct. 8 activity came on the heels of major transfers tracked by Galaxy Research over the prior two days.

On Oct. 7, the organization stated that government-linked addresses transferred roughly 8,428 BTC to Coinbase Prime, following another 834 BTC sent the day before. Combined, those two transactions encompassed about 9,261 BTC, worth an estimated $770 million.

Almost half of those digital assets stemmed from Bitcoin recovered after the Bitfinex hack, while an additional share tied back to past cryptocurrency seizures associated with Binance.

However, the analysis by Galaxy also uncovered 2,456 BTC originating from wallets that had not previously been classified as government-owned.

Researchers attributed those funds to US authorities because they adhered to the exact transfer protocols used by recognized government wallets and landed at a known federal deposit address on Coinbase Prime.

This finding indicates that publicly labeled government addresses may underestimate the total amount of Bitcoin under Washington’s control.

Galaxy reported that the Coinbase Prime deposit address had taken in roughly 11,567 BTC since its initial recorded activity in December 2025. Around 6,406 BTC arrived from recognized government wallets, whereas another 5,160 BTC came from addresses that were previously unlabeled.

Furthermore, the firm categorized the activity from Oct. 7 as the ninth-largest single-day Bitcoin outflow from identified US government addresses since 2013, omitting internal transfers, and the highest since Dec. 2, 2024.

Galaxy calculated that wallets attributed to the government held roughly 319,086 BTC in its prior evaluation, dropping from a peak of 352,587 BTC in August 2024.

These latest movements build upon a pattern of transactions that have brought Washington’s cryptocurrency handling methods into question.

As CryptoSlate previously reported, wallets connected to the government had already shifted about $470 million worth of seized digital currency to likely Coinbase Prime addresses, which included funds linked to Alameda Research and the Bitfinex hack.

Bitfinex ownership dispute complicates Bitcoin reserve policy

The origin of these recent Bitcoin transfers introduces an extra layer of complexity: certain major cryptocurrency holdings belonging to Washington remain tied up in legal battles that could ultimately dictate whether the government gets to keep them.

Galaxy pointed out two especially prominent asset categories within its estimate of government reserves.

The first comprises roughly 94,643 BTC housed in a primary wallet that holds assets recovered from the Bitfinex security breach. The second involves approximately 127,271 BTC tied to Cambodian businessman Chen Zhi and LuBian.

Back in October 2025, the Justice Department entered a civil forfeiture complaint aiming to permanently seize Bitcoin thought to be linked to financial fraud and money laundering.

Taken together, these two categories account for over 66% of the government’s earlier estimated holdings, even though their legal standing differs from Bitcoin that is definitively at the disposal of federal reserves.

The Bitfinex recovery has encountered competing ownership claims.

Initially, federal prosecutors suggested returning the recovered Bitcoin to the trading platform via in-kind restitution. Yet, a federal court ruling in April 2025 denied Bitfinex any direct restitution within the criminal case, routing competing claims over the forfeited coins into a separate ancillary proceeding.

Several former users of Bitfinex have put forward ownership claims against portions of the recovered digital currency, disputing the exchange’s right to claim the entire sum.

According to Galaxy, the main Bitfinex recovery wallet—holding roughly 94,643 BTC—stayed untouched during its review, meaning the recent activity involving another recovery address must be assessed independently.

This ongoing dispute holds consequences for President Donald Trump’s Strategic Bitcoin Reserve.

Under an executive order issued in March 2025, Bitcoin that has completed the forfeiture process and meets specific criteria can be channeled into the reserve, where selling it is generally prohibited.

Even so, the directive allows for certain disposals mandated by courts or legal frameworks, such as transfers addressing approved crime victims and other outlined forfeiture duties.

Because of this distinction, a government-managed Bitcoin wallet is not automatically classified as part of the Strategic Bitcoin Reserve.

If qualifying reserve assets were sold outside the exceptions permitted by the order, it would raise compliance questions regarding the administration’s guidelines. Conversely, transfers executed to satisfy valid restitution or forfeiture requirements would carry distinct legal ramifications.

Regarding the recovered Bitfinex funds, ownership litigation may decide whether successful claimants walk away with large amounts of Bitcoin or if the government retains ownership.

Meanwhile, the destination of the remaining 3,267 BTC from Thursday’s tracked movement—alongside how authorities manage assets already sitting in Coinbase Prime—could offer further insight into Washington’s immediate plans.

Any future liquidations would also reignite scrutiny regarding how federal agencies categorize recovered Bitcoin, especially when assets kept in government wallets remain contested by competing claims instead of being secured for permanent retention inside the reserve.

?Frequently Asked Questions

01Why did the US government move over $1 billion in Bitcoin?

The government-linked wallets transferred 12,267 BTC, with a portion of these funds (9,000 BTC) subsequently reaching Coinbase Prime. These movements are part of ongoing federal asset management and recovery protocols, though they have heightened market speculation about potential sales.

02Does transferring Bitcoin to Coinbase Prime mean the government is selling?

Not necessarily. Depositing assets into Coinbase Prime provides institutional custody and trading services, which allows the government to store or manage funds without executing an immediate market sale.

03What is the Strategic Bitcoin Reserve?

Established under a March 2025 executive order, the Strategic Bitcoin Reserve is designed to hold eligible, formally forfeited Bitcoin where it generally cannot be sold, subject to specific legal and court-mandated exceptions.