- Dormant 2011 Bitcoin wallets linked to massive $9B Galaxy sale.
- CryptoQuant flags possible ties to early MyBitcoin exchange hack.
- Galaxy Digital silent on seller identity, due diligence questioned.
A massive $9.4 billion Bitcoin sale handled by Galaxy Digital is now under scrutiny following claims it may involve assets stolen in one of the earliest crypto exchange hacks.
Galaxy Digital announced this week that it had conducted an over-the-counter transaction of 80,000 Bitcoin. The company termed the seller a long-term Bitcoin investor who joined early in calculating his sale as part of an estate plan.
Recent evidence has, however, called into question this explanation. CryptoQuant CEO Ki Young Ju said the coins were sent out of wallets whose last activity was in 2011. The same wallets were also linked to the defunct MyBitcoin exchange, which closed down following a reported breach.
MyBitcoin was one of the earliest crypto exchanges in the history of cryptocurrencies. Since mid-2011, it has been offline following its operator, Tom Williams, announcing that it had been hacked. At the time, the exchange reported losses of approximately $72,000 worth of Bitcoin. Those coins would now be valued in the billions.
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Ki Young Ju indicated that the wallets were asleep for two months before the platform collapsed. He reckons that Bitcoin was either possessed by the attacker or by Williams himself, who has not shown his face since the exchange went dark.
Galaxy Digital has not revealed who was selling it, identifying them only as a Satoshi-era investor. It has also not offered any additional clues about whether the wallet’s history or control was vetted.
Wallet Origins Now Questioned Amid Security and Transparency Concerns
Concerns are rising that Galaxy may have skipped essential due diligence checks. Ju noted there is no clear indication that Galaxy verified the source of the coins before processing the high-value transaction.
On the same day, although the transfer was of the utmost seriousness, the market price of Bitcoin was relatively stable, with the value pegged at about $117,983. Since the trade was done over the counter, there were no effects on the public order books.
Nevertheless, this has stirred up significant concerns in the crypto sphere. Market players now question how easily questionable historic coins can find their way back into the system without detection.
Such dormant funds movement indicates a change in the market’s behavior. Several of the early holders are no longer trading on open exchanges. Instead, they are selling in bulk without exposure and volatility.
The fact that billions of Bitcoin can be a result of an unmemorized hack that occurred back in 2011 led to the question of security and secrecy in large payments. Galaxy Digital now faces questions about whether enough was done to verify the legitimacy of the assets it helped move.
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