In the past few days, a Reddit user posted a detailed analysis of the transactions originating in a wallet related to the Silk Road website. In the latest update, the researcher asserts that these ill-gotten coins found their way to two of the world’s leading cryptocurrency exchanges, Binance and Bitfinex.
The wallet in question that has created a huge stir among the crypto community, contained over 111,114 BTC/BCH and presumably the same amount in other forked coins. According to the analysis of Reddit user sick_silk, who created the account five days ago just for this disclosure, stated that the wallet sent the equivalent of $100 million to Bitfinex and Binance.
Some Redditors have argued that because both Bitfinex and Binance are largely crypto-crypto exchanges, the mysterious wallet owner is limited to what they can trade into; with altcoins or Tether (USDT) as the most likely options, according to the latest wallet-related thread.
What is currently known, based on wallet analysis, is that 4,421 BTC is waiting in a Binance wallet, and 11,114 BTC has been sent to Bitfinex. A smaller amount of around 210 BTC has been sent to Bitmex.
In theory, BTC could be mixed to avoid tracking but using a privacy coin would be much more efficient, as sending and receiving addresses would be obscured. Sending significant funds on an exchange in effect de-anonymizes the user. With Binance, unverified accounts have severe limitations, as far as withdrawing only 2 BTC per 24 hours. Moving significant funds would require that the exchange wallet owner is not anonymous.
If the seller somehow managed to bypass this security measure (unlikely) they could, potentially, then buy some so-called anonymous coins which are untraceable once taken off the exchange, to cover their escape. Binance offers the opportunity to buy Monero (XMR), ZCash (ZEC), DASH (DASH), or even Verge (XVG).
While this shady scheme was happening across these exchanges, some saw the inflow of extra BTC on the exchanges as a sign of potential mass selling:
There are still ongoing disputes over whether the observed wallet is truly linked to the Silk Road dark market website or whether it could simply be a non-malicious whale investor.
All we do know is that the address in question sent out coins to 80 new addresses in total. This significant amount could seriously sway trading on Binance, if more coins are sent at a later date. The Binance hot wallet currently contains 168,791 BTC. The Bitfinex hot wallet has 209,711 BTC, based on Bitinfo data. The observed address has sufficient funds to sway the markets in the same manner that an earlier transaction from a known Mt. Gox wallet spooked the markets in April with fears of a massive sell-off.