Chinese Cybersecurity Watchdog Alleges US Stole $13.2B in Bitcoin Five Years Ago

China’s national cybersecurity watchdog has accused the US government of illegally seizing billions of dollars worth of information. Bitcoinclaims that its assets were not raised from criminal proceeds linked to Cambodian businessman Cheng Gyi, but rather originated from a hack into a mining pool in 2020.

A technical report issued Sunday by China’s national cybersecurity agency, the China National Computer Virus Emergency Response Center (CVERC), questions the US Department of Justice’s explanation for the seizure.

CVERC claims that the mining pool LuBian was hacked on December 29, 2020, resulting in the loss of 127,272.06 BTC (worth approximately $3.5 billion at the time, the value has since risen to $13.2 billion) allegedly held by Chen Zhi’s Prince Group.

Chen, the group’s chairman, has been accused by U.S. prosecutors of running a large-scale “pig butchering” fraud operation involving forced labor and cryptocurrency fraud.

After the theft, Chen’s team blockchain Messages were sent in 2021 and 2022 offering a ransom for the return of the funds, and the funds were left alone for four years before being moved in mid-2024.

CVERC further claimed in the report that the US government “may have already stolen 127,000 Bitcoins held by Chen Zhi through hacking techniques in 2020.” [the seizure] “This is a classic ‘eat the black’ operation orchestrated by a state-level hacking organization,” the analysis, machine-translated from Chinese, said.

CVERC claims that the address listed in Chen Zhi’s indictment by the Department of Justice matches the address at the time of the LuBian breach in 2020, and cites analysis from Elliptic and Arkham Intelligence to support claims that the seized funds came from compromised mining operations in China and Iran.

A week after the Department of Justice’s Oct. 14 announcement, roughly $2 billion worth of Bitcoin was moved to new wallets.

The alleged theft was first reported on Global TimesAn English tabloid newspaper run by People’s Dailythe state newspaper of the Chinese Communist Party.

decryption has contacted CVERC, the U.S. Treasury Department, and the U.S. Department of Justice for comment. Separate confirmation requests have been sent to Elliptic and Arkham Intelligence.

Insider theft?

This was confirmed by blockchain intelligence company TRM Labs. decryption According to their investigation, the seized bitcoins “originated from 25 unhosted wallets controlled by Chen as of 2020.”

“While we are not sure why or how it was transferred from Mr. Chen’s wallet, the Justice Department’s forfeiture complaint suggests one theory of what happened, at least from the Prince Group’s perspective, that an insider stole the money,” said Angela Ang, director of Asia-Pacific policy and strategic partnerships at the TRM Institute. decryption.

Ang added that on-chain activity indicates the next big movement of these funds will be between June and July 2024.

Ang noted that the funds are currently under the control of the U.S. government and suggested that “the 2024 transaction likely represents the transfer of these assets into U.S. government ownership.”

Asked if their findings include documentation on how U.S. authorities gained access to and control of the wallets identified in the report, Ahn acknowledged the limitations.

“At this time, there is no clear answer as to how the funds came under the control of the U.S. government, but it is likely related to a series of earlier moves,” Ang said.