Last week, a dormant wallet containing approximately 80,000 BTC ($8.6 billion at the time) suddenly came to life, and Crypto Twitter lost its mind.
The coins hadn’t moved since 2011 when Bitcoin was trading for less than $10. For those keeping score (and who isn’t?), that’s a 700,000% return.
Conspiracies swirled instantly. Is this a government or corporate seizure? Is Mt. Gox finally distributing the remaining BTC to former users? Did someone hack an OG wallet?
Maybe…maybe. But probably not. Moreover, as of Tuesday morning, on-chain reports record the whale stash being deposited at Galaxy Digital’s trading desk. It looks like our ancient whale intends to sell at least a portion of the haul.
Let’s debunk most of the conspiracies and learn a bit about how we decipher on-chain data.
An ancient bitcoin whale awakens or something more?
Here are the more popular theories – and why they are probably wrong.
Government seizure: When the feds seize Bitcoin, they don’t do it quietly. They issue press releases, update their websites, and generally make a big show of it. The DOJ loves nothing more than bragging about their crypto busts. But with this movement? Radio silence from Uncle Sam.
Asset forfeiture: This is by far the most interesting conspiracy. Days before the 80,000 wallet started moving, some transactions were sent to the wallet from another address. These transactions contained messages in the OP_RETURN field that read, “NOTICE TO OWNER: see www.salomonbros.com/owner_notice.” That URL linked to a page that said the wallet appears lost/abandoned and that the company on the website, Salomon Brothers, had “taken possession.”
After investigation, the website appears illegitimate, not the least of which because, after a series of scandals, Saloman Brothers was acquired by Traveler’s Group in 1997, later merged with Citigroup in 1998, and dissolved as a brand in 2003 (so maybe the message is tongue-in-cheek).
BitMEX Research reached out to individuals on the site and got responses indicating that the messages were a scam. We should also note that Calvin Ayre is notorious for utilizing a similar “notice” trick to fraudulently sue Bitcoin developers. All indications for these transactions being a response to asset forfeiture appear worthless.
Mt. Gox distributing: Mt. Gox trustees have been incredibly transparent about their distribution process. Every major movement is announced and tracked. The remaining Bitcoin is in documented wallets. None of these wallets are connected to MtGox historically nor do they appear linked in any way to the trustee.
Satoshi is moving coins: This theory is fun, but it’s almost certainly wrong. Here’s why:
Back in 2013, researcher Sergio Demián Lerner developed a method to identify a specific miner active on the Bitcoin network in the first few months of the network’s launch. This miner gave all the indications of being Bitcoin’s pseudonymous creator, Satoshi Nakamoto.
Satoshi displayed mining patterns with a type of fingerprint which Lerner calls the “Patoshi pattern.” The pattern results from the way a miner finds a block – by generating millions of random numbers. Sometimes, these random numbers (called nonces) aren’t totally random depending on the machine used. Satoshi appears to have used a computer that produced an identifiable pattern. Thus, we can reliably estimate which blocks Satoshi mined and therefore track how many BTC Satoshi has.
Using this analysis, we’ve identified approximately 1 million bitcoin that belong to Satoshi. These coins sit in specific blocks mined between January 2009 and May 2010. The 80,000 BTC doesn’t match that pattern nor can it be traced to any coins Satoshi may have mined. Different blocks, different mining signature.
Some of the theories are at least plausible
Now, there are some conspiracy theories that hold some water.
Roger Ver: The erstwhile “Bitcoin Jesus”, Roger Ver, is most infamously known for leading the Bitcoin Cash (BCH) fork in 2017. But Ver is also one of the largest known holders of bitcoin – or at least he might be if he didn’t sell all or most of his BTC for BCH. It’s difficult to know, but in light of the US Government’s recent indictment of Ver for tax fraud, some speculate that these coins might be part of a settlement. One of the supporting clues is that these addresses actually moved coins on the Bitcoin Cash chain first. (If you’re not aware, identical addresses on Bitcoin and forks of Bitcoin use the same private key, so if you can move BTC on once chain you can move BCH on the other and vice versa)
Stolen Coins: In my opinion, this is the most likely of all the theories. It’s not unthinkable for an attacker to gain access to a wallet and then make a test transaction on Bitcoin Cash before moving the big wallets on BTC. It’s less likely that someone is watching both BCH and BTC to see that their private key is compromised. Going further, it could even be feasible for the culprit to try to throw people off their track by creating a fake asset forfeiture message in OP_RETURN. Crazier things have happened.
Now, all of that said, Occam’s Razor would have us assume that there’s no grand conspiracy. The boring, simple truth is that this is probably just an OG bitcoin whale moving their old coins – something that happens more often than you would think.
The boring truth about old bitcoin wallets
Here’s what people forget: Bitcoin’s early days were wild. People mined on laptops for fun. They bought pizzas with 10,000 BTC (multiple times, in fact). They lost hard drives with thousands of coins.
But some people were smart or lucky or both and hodled for years. Maybe they stored their keys safely and woke up 15 years later with a multi-billion dollar fortune.
We’ve seen wallets dormant since the early days of Bitcoin wake up every few months. Each time it becomes a news event and sometimes wacky theories percolate through social media. These aren’t mysterious entities or shadowy governments, they’re early adopters who finally decided to cash out some profits.
What the 80,000 BTC move really tells us
Every time an ancient wallet moves, it’s a reminder that Bitcoin’s distribution is more complex than most realize. There are still OGs out there sitting on massive stacks, folks you might call Ancient Bitcoin Whales.
However the era for old addresses waking up may be coming to an end. Sani from Timechainindex.com says “there are no more unidentified 10,000 BTC addresses on the network.”
Given that assertion, we should probably go easy on people who theorize and noodle over this move, because there’s not much more Ancient Bitcoin Whale spotting left to do.
Photo by Meg von Haartman on Unsplash
