A US government Bitcoin transfer of roughly $297 million in seized BTC and ETH landed at Coinbase Prime on Monday, raising fresh questions about compliance with Trump’s Strategic Bitcoin Reserve order, which bars the sale of seized Bitcoin without a court mandate or other legal exception.
Blockchain data tracked by Arkham’s government wallet monitor recorded two outflows: approximately 3,940 BTC (around $244 million) and roughly 30,000 ETH (around $53 million) at the time of the transfers. Dollar values shift with spot prices, so the figures are point-in-time estimates rather than fixed sums.
Where the coins came from
Galaxy Research head Alex Thorn identified the Bitcoin as originating from two enforcement cases. ‘These coin movements were comprised of coins seized from Ryan Farace and defunct crypto exchange BTC-e,’ Thorn said.
Farace, known online as ‘Xanaxman,’ pleaded guilty to dark web drug distribution and money laundering charges, agreeing to forfeit assets of at least $5,665,000 plus 4,000 BTC. The DOJ conducted two seizures: an initial round on 10 February 2021, followed by a second on 11 May 2021 that recovered an additional 58.742 BTC in drug-trafficking proceeds. Both Farace and his father were subsequently sentenced for laundering those Bitcoin proceeds.
The DOJ had previously announced a plan to sell 2,933.64 BTC from the Farace seizure, valued at approximately $116 million at the time of that announcement, per Bitcoin.com News. Monday’s transfer appears to involve coins from the same enforcement pool.
The ETH portion traces to Brian Krewson, identified by Forbes as an Oracle technical employee whom the DOJ alleged stored and laundered $54 million in cryptocurrency for two cocaine traffickers convicted in 2018. As of November 2023, Krewson himself had not been charged with a crime.
US government Bitcoin transfer mechanics: custody, not confirmed liquidation
A deposit to Coinbase Prime does not constitute a sale. The platform provides custody, execution, financing, and staking services. The US Marshals Service (USMS) selected Coinbase Prime in 2024 as its provider for ‘Class 1’ large-cap digital assets, covering custody and advanced trading for the Asset Forfeiture Division. Coinbase’s blog states the platform safeguarded $330 billion of assets as of 31 March 2024.
The contract value is disputed between sources: Bloomberg Law puts the five-year USMS agreement at $32.5 million, while Digital Transactions reports $35.5 million. Neither figure has been confirmed in a public USMS filing.
Agencies routinely use the platform to consolidate wallets or shift assets into managed custody ahead of any disposal decision. On-chain records show where funds moved; they do not reveal the government’s final instructions to Coinbase Prime. A confirmed sale would require subsequent wallet outflows, trading records, or an official statement.
The reserve policy complication
Trump’s March 2025 executive order established a Strategic Bitcoin Reserve with an explicit prohibition: Bitcoin placed in the reserve ‘shall not be sold’ and must remain a US reserve asset. Exceptions exist for victim restitution ordered by a court, law enforcement use, or other existing legal authority.
Ether and non-Bitcoin holdings fall under a separate digital asset stockpile, where the Treasury sets stewardship plans within its legal mandate. Monday’s ETH transfer therefore sits in a different legal lane from the BTC portion.
Federal agencies are still negotiating who controls the Bitcoin reserve, with Treasury and Commerce both in discussions over custody arrangements, legal authority, and whether new legislation is needed. Government-tracked wallets hold an estimated $20.5 billion in crypto in total, of which roughly 325,000 BTC accounts for the bulk. Public trackers may miss unlabelled federal addresses, so the figure is an estimate.
Until Coinbase Prime reports a disposal or a federal court order surfaces, Monday’s movement stays in the custody column. The next datapoint to watch is any outflow from Coinbase Prime’s known government-associated addresses.
