Signs have been detected that bitcoin worth $1 million returned to its original wallet after passing through a major centralised exchange and was ultimately burned.

Cointelegraph reported on Aug. 31, local time, that the wallet remained dormant for about 12 years before suddenly moving its entire 20.00010537 bitcoin holding in March. Three weeks later, it received a similar amount of 20.00006037 bitcoin.

The key point is that the funds are difficult to view as a simple trade or ordinary transfer. Bitcoin educator Bennett analysed that the funds were sent to a kind of custodian and then returned. The difference in the amount returned was 4,500 satoshis, or about $3 at the time. The bitcoin was later sent in May to an unrecoverable address, fully burning it.

The transaction was identified as part of a total 107 bitcoin burned in May. It was worth about $8.5 million at the time. Blockchain analytics firm Chainalysis said it found signs suggesting the same owner managed the five addresses that ultimately burned the bitcoin. All of the addresses received funds on the same day in April 2014 and then sent bitcoin of a similar dollar-converted value to the deposit address of the same major centralised exchange.

The origin of the funds also stands out. Chainalysis said most of the flow can be traced back to Mt. Gox and raised the possibility the owner was an early bitcoin user. It does not mean the bitcoin was withdrawn directly from Mt. Gox. Mt. Gox halted trading in February 2014, while the five wallets received funds in April that year.

Past transaction patterns repeatedly showed transfers of a fixed dollar amount. One of the five addresses sent 19.6 bitcoin to the same custodian in 60 transactions from 2022 to 2024. The bitcoin amount varied from 0.15 to 0.62, but in dollar terms, 58 of the 60 transactions fell within a 10 percent range of about $10,400.

The March round trip was more unusual. A wallet that had been inactive for 12 years sent its entire balance and then received almost the same amount back. The returned bitcoin arrived over three consecutive days split into 7 bitcoin, 7 bitcoin and 6.00006037 bitcoin. Bennett said such whole-number splitting matched a custodian's daily withdrawal limit.

Control of the private key is also an important clue. Bennett said a private key was needed to move the bitcoin in March and the same key was needed to burn it in May, raising the possibility that the same key holder controlled the funds before and after the round trip. That suggests it is likely the owner received the asset back directly and burned it.

Several possibilities were raised about the reason for the burn, but no clear conclusion emerged. Possibilities cited include testing an old wallet or custody system, or conducting the transaction for tax and compliance purposes. There was also speculation it may have sought to make on-chain tracking more difficult by using an exchange's pooled wallet structure. There is no evidence it was linked to a specific tax or regulatory event, and it is also hard to explain why privacy alone would have led to a final burn.

Chainalysis also did not reach a clear conclusion. The blockchain records what happened in unusually detailed fashion, but it does not show why the parties chose to do it. As a result, the reasons behind burning 107 bitcoin and the purpose of the 20 bitcoin round trip in March are expected to remain a mystery for the time being.