On-Chain Analysts Knew About Feds' $4.1B Bitcoin Seizure A Week In Advance, Says Ark Analyst

Even before it was announced by the Department of Justice, the recent seizure of 94,000 Bitcoin BTC/USD — worth nearly $4.09 billion at press time — was known to on-chain analysts, according to Cathie Wood’s Ark Invest.

What Happened: The seizure, related to the 2016 Bitfinex hack, also saw the arrest of Ilya Lichtenstein and Heather Morgan, the two are accused of the attack on the exchange and money laundering post the incident.

Ark Invest analyst Yassine Elmandjra wrote in a recent newsletter that while on-chain analysts did not know the identity of the entity involved, they knew about the Bitfinex seizure a week before it was announced.

The analysts discovered that an entity associated with a government agency moved unlaundered bitcoins. The reason the analysts knew, as per the Ark analyst, is that they did not attempt to mask the transaction and consolidated the Bitcoin into a single address.

Elmandjra pointed to a Twitter thread by on-chain researcher David Puell to make his point. 

2/ At the time, we saw major concentration of the hacked coins into a single address, since these had been ID'd for years. Link to current Bech32 address here: https://t.co/tB4eWo6ux7 pic.twitter.com/Um4s6EBKmX

— David Puell (@kenoshaking) February 8, 2022

See Also: How To Buy Bitcoin (BTC)

Why it Matters: The incident highlights the openness and transparency of Bitcoin’s blockchain, according to Elmandjra.

“Anyone can track bitcoin transactions in real-time, which in this case helped on-chain analysts detect that a government had retrieved stolen bitcoins.”

The analyst said that since public blockchains don’t allow “information asymmetry” that underpins traditional financial markets, a global financial system built on blockchain could prevent counterparty risk — the kind that was at the center of crisis similar to the one in 2008-2009.

Price Action: At press time, Bitcoin traded 1% higher at $42,463.71 over 24 hours.

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