U.S. government-linked Bitcoin transfers to Coinbase Prime were substantially larger than initially understood, with Galaxy Research tracing approximately 9,261 BTC worth roughly $770 million into the institutional platform over two days.
The analysis expands on an earlier batch of roughly 833.6 BTC that attracted attention on October 7. Dave Finances initially reported that U.S. government wallets moved Bitcoin and BNB through several addresses, including Bitcoin ultimately deposited with Coinbase Prime.
Galaxy’s broader reconstruction suggests that movement represented only part of a much larger sequence.
More unusually, approximately 2,456 BTC in the two-day flow came from addresses that had not previously been publicly labeled as U.S. government holdings. Galaxy categorized those coins as government-seized assets based on the transaction path they followed into the same Coinbase Prime infrastructure used by known government wallets.
That means roughly 26.5% of the 9,261 BTC transfer originated from previously unlabeled addresses, illustrating how public trackers can materially underestimate government-controlled cryptocurrency when attribution depends on visible wallet labels.
Coinbase Prime Address Has Received 11,567 BTC Since December
Galaxy examined the history of the Coinbase Prime deposit address involved in the transfers rather than looking only at the latest transactions.
The address has received approximately 11,567 BTC since it first became active in December 2025. Around 6,406 BTC arrived from wallets that had already been publicly labeled as U.S. government addresses, while another 5,160 BTC came from wallets without those prior labels.
The transaction pattern allowed researchers to associate additional addresses with government-controlled assets after the fact.
That is an important limitation of blockchain portfolio estimates. Bitcoin transactions themselves are public, but the identity controlling a wallet is not encoded into the blockchain. Analytics providers normally build government labels from court filings, seizure announcements, known transaction histories and relationships between addresses.
A wallet can therefore hold seized assets for months without appearing inside the headline balance attributed to the U.S. government until another transaction reveals the connection.
Galaxy now estimates that U.S. government-related wallets control approximately 319,086 BTC.
Nearly Half of the Transfer Traces Back to the Bitfinex Hack
The provenance of the Bitcoin matters more than the Coinbase destination.
Galaxy found that nearly half of the latest transfer can be traced to Bitcoin recovered by U.S. authorities following the 2016 Bitfinex hack. Another portion came from previously identified seized assets linked to Binance-related enforcement activity.
The Bitfinex coins occupy an unusual legal category.
U.S. authorities recovered more than 94,000 BTC from the wallet that received funds stolen from Bitfinex after obtaining the private keys during the investigation into Ilya Lichtenstein and Heather Morgan.
Federal proceedings subsequently moved toward returning approximately 94,643 BTC directly to Bitfinex as in-kind restitution rather than treating those coins as ordinary government property available for discretionary sale.
That makes it misleading to treat every Bitcoin sitting in a government-controlled wallet as part of one unified federal Bitcoin investment portfolio.
Some assets have been finally forfeited to the government. Others may ultimately be returned to crime victims, distributed through remission programs, used to satisfy court orders or handled under other forfeiture requirements.
A Coinbase Prime Deposit Is Still Not Evidence of a Sale
The immediate market temptation is to translate $770 million entering Coinbase Prime into $770 million of incoming Bitcoin sell pressure.
The blockchain does not establish that.
Coinbase Prime is not simply an exchange deposit endpoint. The institutional platform provides custody, execution, financing and other services, meaning assets can reach its infrastructure without immediately being sold.
This distinction already mattered in the October 7 transfer. The earlier 833.6 BTC included coins connected to HashFlare victim restitution and the Bitfinex recovery, making the legal purpose of each tranche more important than the destination address itself.
Actual liquidation would leave a different economic footprint. Dave Finances recently examined how Strategy’s actual Bitcoin sales changed its exposure, which is fundamentally different from simply moving coins between custody addresses.
Blockchain observers can confirm that the government-controlled Bitcoin reached Coinbase infrastructure. They cannot see the instruction given to Coinbase telling it whether to hold, transfer, return or sell those coins.
The Strategic Bitcoin Reserve Makes Provenance Critical
The ambiguity has become more important since the United States changed its policy toward seized Bitcoin.
President Donald Trump’s March 2025 executive order established the Strategic Bitcoin Reserve and directed that qualifying finally forfeited Bitcoin deposited into it generally be maintained rather than sold.
The Strategic Bitcoin Reserve executive order, however, does not prohibit every disposition of every Bitcoin that federal authorities temporarily control.
The order preserves exceptions where assets need to be returned to identifiable victims, used for law-enforcement purposes, released under court orders or handled to satisfy statutory forfeiture requirements.
That distinction is directly relevant to Bitfinex.
If recovered BTC is being transferred through Coinbase Prime as part of an in-kind return to Bitfinex, the transaction is not equivalent to Washington deciding to liquidate part of its strategic reserve.
The same principle applies to seized Bitcoin earmarked for victim compensation in other cases.
The 2,456 Previously Unlabeled BTC May Be the More Important Discovery
The $770 million headline is large, but the more interesting finding may be the 2,456 BTC that researchers did not previously know belonged to the government’s seizure network.
At the implied valuation used in Galaxy’s analysis, that tranche alone represents roughly $204 million.
More importantly, it exposes a problem with treating public government-wallet dashboards as precise balance sheets.
Those dashboards are extremely useful, but they are attribution models built on incomplete information. A government agency does not need to publicly label a Bitcoin address before using it.
Galaxy’s analysis suggests that transaction behavior itself can reveal ownership relationships that were missing from existing labels.
That raises the possibility that other government-controlled Bitcoin remains outside widely cited public estimates.
It also works in the opposite direction. A wallet being controlled by a government agency does not necessarily mean the government economically owns the assets indefinitely. Custody, forfeiture and beneficial ownership can be different things.
Government Bitcoin Holdings Are More Concentrated Than They Look
Galaxy estimates that approximately 71% of the government’s tracked Bitcoin position is connected to just two major sources: the Bitfinex recovery and BTC associated with the LuBian case.
Approximately 94,643 BTC remains associated with the principal Bitfinex recovery address, while roughly 127,271 BTC is connected to assets involved in the LuBian forfeiture case.
That concentration matters because headlines describing the United States as holding more than 300,000 BTC can imply that Washington has accumulated one giant strategic position.
The legal reality is messier.
A large part of the balance arrived through law enforcement rather than deliberate market purchases, and separate pools of Bitcoin can have completely different restrictions on what the government is allowed or required to do with them.
The headline balance is therefore less informative than a case-by-case breakdown of the coins.
A $770 Million Transfer Is Large but Not Automatically Large Sell Pressure
For Bitcoin traders, the relevant question is not how many coins moved. It is how many coins actually become available for sale.
Wallet activity routinely generates misleading market signals because transfers are easier to observe than economic intent.
Dave Finances has previously examined how large Bitcoin flows can occur without equivalent spot-price pressure. Coins changing custody or ownership do not mechanically translate into a market order hitting an exchange book.
The same principle applies here.
If Coinbase simply holds thousands of government-linked Bitcoin in institutional custody, there is effectively no new sell order. If the assets are transferred in kind to Bitfinex, there is still no automatic sale. Even if liquidation is eventually required for another seizure case, execution could occur through an institutional block trade rather than a large visible market order.
That does not mean the movement should be ignored.
Coinbase Prime has execution infrastructure as well as custody capabilities, so moving coins there places them somewhere from which a sale could be carried out efficiently. It simply does not prove that such an instruction has been issued.
The Market Should Watch What Happens After Coinbase Prime
The most useful next signal will come after the deposit.
If subsequent blockchain movements show Bitcoin leaving Coinbase-controlled infrastructure toward restitution addresses, the case for administrative transfers becomes stronger. Government or court disclosures identifying specific victim distributions would provide even clearer evidence.
If authorities confirm dollar liquidation, that would turn the story into an actual supply event.
Until then, the 9,261 BTC movement should be understood primarily as a major consolidation and attribution event.
It also highlights Coinbase’s increasingly important role in institutional crypto infrastructure. The company’s reach now extends well beyond retail exchange activity, including a broader market-structure expansion that Dave Finances recently examined as Coinbase integrates Deribit deeper into its trading ecosystem.
For investors, the biggest lesson is that an on-chain government balance is not the same thing as a sovereign investment portfolio, and an exchange deposit is not the same thing as a sale.
Galaxy’s work makes the U.S. government’s Bitcoin footprint look larger and more complicated than public wallet labels previously suggested.
The 9,261 BTC definitely moved.
Whether any meaningful portion of it is actually being sold remains an entirely different question.
Johan Shamshad is a financial markets writer at Dave Finances covering cryptocurrencies, trading platforms, brokers, fintech, financial regulation, and developments across global markets. He previously worked at Gulf News, adding newsroom experience to his coverage of fast-moving financial and digital-asset markets.
His work focuses on identifying market-moving events, company developments, regulatory changes, product launches, and shifts in trading and financial infrastructure.
Johan contributes news and analysis designed to help readers understand not only what happened, but why a development matters and how it may affect the wider financial landscape.