DOJ targets 127,271 Bitcoin in largest forfeiture action as government shifts holdings to Coinbase Prime
The Department of Justice filed a civil forfeiture action targeting $15 billion in Bitcoin allegedly linked to cryptocurrency fraud and money laundering associated with Cambodia. The timing of this enforcement action coincides with substantial movement of government-held Bitcoin to institutional custody, renewing scrutiny of how federal agencies manage recovered digital assets under the Trump administration’s Strategic Bitcoin Reserve policy.
- DOJ filed civil forfeiture complaint against 127,271 BTC, now worth approximately $15 billion.
- Galaxy Research identified 12,267 BTC moved to Coinbase Prime on Oct. 8, with 9,000 BTC reaching institutional custody.
- Government Bitcoin holdings fell to approximately 319,086 BTC, down from 352,587 BTC peak in August 2024.
- $15B Forfeiture value of Bitcoin tied to alleged crypto fraud schemes.
- 127,271 Bitcoin seized in largest DOJ forfeiture action in history.
- $82,500 Bitcoin price after $4,000 decline over three-day government transfer period.
The U.S. Department of Justice filed a civil forfeiture complaint targeting approximately 127,271 Bitcoin currently in government custody, marking the largest forfeiture action in Department history. The complaint alleges the assets are proceeds and instrumentalities of cryptocurrency fraud and money-laundering schemes associated with Cambodian businessman Chen Zhi.
DOJ files $15 billion forfeiture as Bitcoin moves to Coinbase Prime
The timing of the forfeiture action overlaps with reported activity in which Galaxy Research flagged the transfer of 12,267 BTC valued at approximately $1 billion from government-controlled addresses on October 8 (Thursday). Blockchain analyst EmberCN reported that 9,000 BTC, worth roughly $739 million, subsequently reached Coinbase Prime, Coinbase’s institutional trading and custody platform. These movements extended three consecutive days of government-linked transfers that coincided with Bitcoin’s price decline from approximately $86,500 on October 6 (Tuesday) to around $82,500 by Thursday.
The transfers do not prove immediate liquidation; Coinbase Prime provides custody and trading services where assets can be deposited without sale.
Previously unlabeled government wallets hold 5,160 Bitcoin at Coinbase
Galaxy Research’s analysis uncovered a significant discrepancy in publicly available accounting of government Bitcoin holdings. The firm identified 2,456 BTC originating from wallets not previously classified as government holdings, attributing them to U.S. authorities based on matching transfer procedures and routing to identified federal Coinbase Prime deposit addresses.
This discovery suggests that publicly labeled government Bitcoin wallets may substantially understate Washington’s total holdings. Since December 2025, when the Coinbase Prime deposit address first appeared, approximately 11,567 BTC flowed into that address, 6,406 BTC from identified government wallets and 5,160 BTC from previously unlabeled addresses.
The October 7 activity qualified as the ninth-largest single-day Bitcoin outflow from identified U.S. government wallets since 2013 and the largest since December 2, 2024. Government-attributed holdings have declined to approximately 319,086 BTC from a peak of 352,587 BTC in August 2024, reflecting ongoing transfers and custody adjustments.
Legal disputes over Bitfinex recovery and Strategic Reserve eligibility cloud policy clarity
The largest complications for federal Bitcoin management stem from two asset groups representing more than 66 percent of government holdings. Approximately 94,643 BTC remains held in a principal wallet containing assets recovered from the 2016 Bitfinex hack, while roughly 127,271 BTC, now the subject of the DOJ’s forfeiture complaint, is associated with Chen Zhi and alleged cryptocurrency fraud.
The Bitfinex recovery has faced competing ownership claims. An April 2025 federal court ruling awarded Bitfinex no direct restitution in criminal proceedings and directed competing claims into a separate ancillary proceeding, where former customers have asserted ownership stakes against portions of the recovered cryptocurrency.
These disputes carry direct implications for President Donald Trump’s March 2025 Strategic Bitcoin Reserve executive order, which permits transfers of forfeited Bitcoin meeting eligibility requirements into the reserve, where assets generally cannot be sold.
The order does carve exceptions for disposals required by courts or law, including transfers for verified crime victims and specified forfeiture obligations. A confirmed sale of qualifying reserve assets outside those exceptions would raise compliance questions, while transfers to satisfy legitimate restitution or forfeiture obligations carry different legal weight.
Whether assets already deposited at Coinbase Prime remain subject to reserve restrictions remains unclear, as does which claimant will ultimately control the Bitfinex-recovered Bitcoin if ownership disputes resolve against federal retention.
The CCS read. We see Bitcoin moving to institutional venues without certainty that sales follow, yet the underlying legal entitlement to these assets, especially Bitfinex recovery and Chen Zhi proceeds, remains contested and may never rest firmly with the government as reserve-eligible holdings. How the administration classifies and eventually treats these disputed Bitcoin will determine whether the Strategic Reserve truly locks up federal holdings or functions as a holding area pending legal resolution.
The federal court’s next ruling on Bitfinex ownership claims in the ancillary proceeding, combined with Chen Zhi’s extradition status and any subsequent Bitcoin movements from Coinbase Prime deposit addresses, will clarify whether these $15 billion in combined government-held Bitcoin represent permanent reserve assets or temporary custody pending civil and criminal resolution.