China has accused the United States of secretly seizing 127,000 bitcoins worth about $13 billion in the 2020 LuBian mining pool hack, calling it a state-sponsored cyber operation.
However, the US denied this claim, saying the bitcoins were legally seized in an entirely separate fraud case. The dispute has renewed global concerns about the sovereignty of digital assets.
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Sovereignty conflict over LuBian funds
According to reports, China has accused the US of seizing funds recovered from the LuBian hack under the guise of law enforcement operations.
The US Department of Justice (DOJ) reportedly refuted these charges. According to the report, the United States has legally seized Bitcoin as part of a fraud investigation against Cambodian businessman Cheng Zhi, who is accused of cryptocurrency fraud and human trafficking across Southeast Asia.
Last month, the Department of Justice filed a civil forfeiture lawsuit seeking control of approximately 127,271 Bitcoins worth more than $15 billion. U.S. officials said the move was coordinated with international partners to compensate victims of Chen’s network.
Around that time, blockchain analytics firm Arkham Intelligence tracked activity from wallets linked to LuBian. The large-scale Bitcoin transfer reportedly occurred at the same time that the Justice Department lawsuit became public.
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The revelation became the focus of China’s challenge to the U.S. government’s explanation.
China’s Cyber ​​Security Agency claimed that the timing of the transfers did not coincide with regular law enforcement seizures.
Instead, he suggested the move was an indication that the United States may have gained access to Bitcoin earlier than officially recognized.
This latest dispute between China and the US has reignited the debate over the sovereignty of digital assets.
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The tug-of-war between the two superpowers over Bitcoin highlights broader issues regarding cross-border money. Experts say cryptocurrency enforcement has evolved into a geopolitical tool.
Bitcoin’s status as a non-sovereign asset allows states to expand their influence through legal systems and technology.
The Financial Stability Board also warned that there are significant gaps in global cryptocurrency regulation. The report notes that without a unified framework, countries act independently, often to achieve strategic interests.
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At the same time, Beijing’s discontent stems from long-standing concerns about Western dominance in blockchain infrastructure and financial oversight.
China views U.S. dominance of its digital systems as a form of economic leverage and is pushing its own blockchain standards and digital yuan as a countermeasure.
The United States has relied on aggressive enforcement to expand its jurisdiction and strengthen its role in cross-border crypto asset operations, as seen in the Silk Road and Bitfinex cases.
But critics warn that this piecemeal approach risks undermining international trust.
Without coordination, major countries will apply their own justice, turning crypto seizures into instruments of national politics rather than effective crime prevention.