When a whale moved over $100m-worth of BTC to exchanges, $100m Tether tokens (USDT) were printed. BTC lost $1,000 of its value 3 days after. Everyone is asking what happened and if these events were connected? Here begins the story of the 1933-wallet.
The owner of a mysterious, almost $1bn-worth, BTC/BCH wallet started moving funds to exchanges after 4 years of holding. This has attracted a lot of interest recently, due to potential influence on the price of cryptocurrencies. Even though the owner of the funds tried to cover the tracks by mixing the coins, Redditor “sick_silk” and some other members of the community followed the trail.
111,114 BTC/BCH were moved from the 1933-wallet to the 15ihHo-wallet, and then split into many 100-coin sub-wallets in March of 2014. The owner probably did it in order to avoid attention and scrutiny which large wallets generally receive. Funds in those sub-wallets were dormant until the end of August 2018, when they started moving to exchanges.
Considering that the Bitcoin lost $1,000 in value in just 15h, on the 5th of September, it is reasonable to assume that it might have been caused by the sell-off of these coins. Low volume of trade during bear market, makes the price fragile and susceptible to large price drops when whales are cashing out. Cashing out massive amounts without dumping the price would be a slow and long process, but it would be in the interest of the whale concerned. However, it looks like this whale is in the hurry, thus, tanking the price is inevitable. Nevertheless, it is puzzling to see someone cashing out such a large amount during the bear market, after four years of patient hodling.
Traders will be watching closely to see whether more, 1399-related, Bitcoins will hit the exchanges.
Even more interesting are the different scenarios assigned to the origins of these funds.
One of the most probable theories links the wallet to the Silk Road.
There is a connection between the 1933-wallet and Ross Ulbricht’s wallet 1LDNL. He revealed the 1LDN unintentionally in the 2011 post. 2,000 BTC sent from the 1LDN-wallet on the 30 April 2011 ended up in the first and the largest batch of Bitcoins deposited to 1933-wallet, after going through five addresses. However, even though those intermediate addresses look like they were used solely for mixing, stronger evidence is needed to connect Ross Ulbricht or someone from Silk Road with the 1933-wallet.
Dark market Silk Road was one of the main forces behind the adoption of Bitcoin at the time. People believed that over 600,000 BTC once belonged to DPR (Dread Pirate Roberts), the alias used by Ross Ulbricht and possibly other moderators. Considering that Bitcoins weren’t worth much back then, they spent vast quantities of Bitcoins on running Silk Road. FBI seized 174,000 BTC from the remaining sum placed in these two wallets: one and two, and has since publicly auctioned off at least 124,700 BTC. Seized coins, however, are not significantly linked to the 1933-wallet.
Ross Ulbricht is in prison, so there is a little possibility that he would move the funds. However, it was suggested on many occasions that more than one moderator was using the username DPR (Dread Pirate Robert) on Silk Road and that Ross wasn’t the only one with the access to the funds. Furthermore, we shouldn’t underestimate the fact that the rogue FBI agents managed to steal some of the Silk Road’s funds during that time. Besides that, there was a rumour that a famous LulzSec hacker – turned FBI informant, Hector Monsegur – Sabu was involved in taking down of the Silk Road.
Regarding all these controversies, worthy of a movie script, we might as well leave the option, of 1933-wallet being connected to the Silk Road, open.
The other theory connects the wallet to Mt.Gox, which lost 850,000 BTC in a hack.
Mt.Gox CEO, Mark Karpeles, “miraculously found“ 200,000 BTC on Mar 7, 2014, when they were moved to the online wallet and then split to cold storage wallets between 14-15 March 2014. Around the time the coins from 15ihHo wallet were split as well. Both 1933-funds and 200,000 BTC “found” by Karpeles, laid dormant for almost 3 years before Mt.Gox hack happened. But, these events do not really prove anything. They might as well be a coincidence.
Even though at least two Mt.Gox deposits were consolidated into the 1933-wallet, whoever owned it, was most likely using that exchange at some point, considering that it held 70% share of the market at the time.
Many whales got worried, so they moved and mixed their funds after the Mt.Gox hack. Thus, there is an option 1933-funds might belong to one of the whales who tried to hide his stash from the consequences of possible identity loss connected to the hack.
There is also a possibility those funds were hacked or stolen, which would explain why they laid dormant for years.
Craig Wright stated that the 1933-wallet is his, a claim which was ridiculed and proven to be false. This Australian professor, famous for claiming to be Satoshi Nakamoto, was sued for $10bn by the brother of Security Scientist, David Kleiman. The lawsuit says Wright forged and backdated an IP agreement with Kleiman after Kleiman’s death. According to this IP agreement, Wright has given Kleiman the 1933-wallet to hold in escrow. Wright also laid claim to other large Bitcoin wallets, which didn’t even exist or were empty when the contracts were supposedly signed. Some were Mt.Gox’s addresses and one was even a direct recipient of Mt.Gox stolen coins from an earlier hack. As it appears, he effectively declared to have robbed Mt.Gox.
Whichever scenario is true, Bitfinex and Binance are the rare ones who might know the answer due to their KYC requirements.