China’s top cybersecurity agency has accused the United States of being involved in one of the largest crypto thefts ever recorded, intensifying friction between the two global powers. The dispute centers on a missing trove of 127,000 Bitcoin, currently valued at $13 billion, which vanished nearly five years ago.
According to a recent technical report from China’s National Computer Virus Emergency Response Center (CVERC), the United States’ Justice Department (DOJ) allegedly seized Bitcoin originally stolen from the LuBian mining pool in 2020.
The crypto was linked to Cambodia’s Prince Group CEO Chen Zhi, who is currently facing criminal charges in the United States for allegedly running a major crypto fraud operation. Following the breach, Chen and his company repeatedly issued blockchain messages throughout early 2021 and mid-2022, offering a ransom and pleading for the return of the missing assets. The messages, however, went unanswered.
CVERC’s analysis outlines a sophisticated attack that it attributes to a “state-level hacking group,” according to the Global Times, a state-run Chinese newspaper connected to the People’s Daily. The stolen Bitcoin sat dormant in blockchain addresses without movement or trace until mid-last year, when they were moved into new wallets.
Last month, the U.S. Justice Department launched a civil forfeiture case seeking to claim roughly 127,271 Bitcoin, which it maintains is part of a coordinated effort with international partners to recover assets tied to Chen’s alleged fraud operations and compensate affected victims.
Data from Arkham Intelligence confirmed wallet movements connected to LuBian around the same time the U.S. legal filing was made public. The Justice Department’s announcement coincided with a particularly large transaction, which fueled speculation about coordination and timing.
CVERC disputes Washington’s account, arguing that the seizure may have been orchestrated by the same actors responsible for the 2020 hack, rather than legitimate law enforcement activity. The U.S. government has not issued a direct rebuttal, maintaining only that its actions complied with international law.
Meanwhile, Bitcoin prices have slipped to $104,374, down 1.8% after touching a session high of $107,355. With a total market value near $2.08 trillion, analysts note that approximately 0.65% of Bitcoin’s circulating supply is now locked in the dispute, potentially tightening liquidity.
Despite the geopolitical friction, institutional demand for Bitcoin remains robust as large exchange-traded funds continue to attract inflows, underscoring the cryptocurrency’s growing role as a geopolitical and financial asset.
Major exchanges like Coinbase Global Inc. (NASDAQ: COIN) will be hoping that more illegal actors are weeded out of the industry’s ecosystem so that the growth of cryptos as financial assets isn’t sidetracked by concerns about hacking.
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