China’s cybersecurity agency accuses the U.S. of seizing $13.2 billion in Bitcoin from a 2020 mining pool hack involving LuBian, not from criminal proceeds linked to businessman Chen Zhi, as claimed by the U.S. Department of Justice in their recent announcement.
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Chinese report challenges U.S. narrative: The China National Computer Virus Emergency Response Center (CVERC) alleges the seized Bitcoin originated from a December 2020 hack of the LuBian mining pool, losing 127,272.06 BTC.
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Blockchain analysis from firms like Elliptic and Arkham Intelligence supports claims that the funds trace back to compromised operations in China and Iran.
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Value surge: The stolen Bitcoin, worth $3.5 billion at the time, now totals $13.2 billion, with movements detected in mid-2024 leading to U.S. custody.
US Bitcoin seizure controversy: China accuses U.S. of hacking 2020 mining pool theft. Uncover the facts on this $13B crypto dispute and implications for global finance. Read more now!
What is the controversy over the US Bitcoin seizure from the 2020 LuBian mining pool hack?
The US Bitcoin seizure from the 2020 LuBian mining pool hack centers on conflicting claims between Chinese authorities and the U.S. Department of Justice regarding the origin of 127,272.06 BTC, valued at $13.2 billion today. China’s National Computer Virus Emergency Response Center (CVERC) issued a report asserting that the U.S. unlawfully acquired these assets through hacking, rebranding them as proceeds from a scam operation run by Cambodian businessman Chen Zhi. In contrast, U.S. prosecutors link the funds to Chen’s alleged “pig-butchering” fraud involving forced labor and cryptocurrency deception.
How did the 2020 LuBian mining pool hack occur and what evidence supports China’s allegations?
The hack targeted LuBian, a Chinese mining pool, on December 29, 2020, resulting in the theft of 127,272.06 BTC, equivalent to about $3.5 billion at the time. According to CVERC’s technical analysis, the stolen funds were held by Chen Zhi’s Prince Group, and subsequent blockchain messages in 2021 and 2022 offered ransoms for their return, which went unanswered for four years until movements in mid-2024. CVERC cites blockchain forensics from Elliptic and Arkham Intelligence, which trace the addresses in the U.S. indictment directly to the LuBian breach, suggesting involvement from compromised mining setups in China and Iran. The report describes the U.S. action as a “black-eats-black” operation by a state-level hacking entity. Following the DOJ’s October 14 announcement, approximately $2 billion in Bitcoin shifted to new wallets, now under U.S. government control. TRM Labs, a blockchain intelligence firm, confirmed the funds stemmed from 25 unhosted wallets controlled by Chen in 2020, with on-chain data showing key transfers between June and July 2024.
Frequently Asked Questions
Did the US government hack the LuBian mining pool to seize Chen Zhi’s Bitcoin?
China’s CVERC alleges that the U.S. may have used hacking techniques to steal the 127,000 BTC in 2020, later claiming it as forfeited criminal assets from Chen Zhi’s operations. However, U.S. officials maintain the seizure stemmed from legitimate forfeiture of scam proceeds, with no admission of hacking. Blockchain experts like those at TRM Labs note plausible insider theft theories but lack definitive proof on U.S. access methods.
What are the current implications of the US Bitcoin seizure controversy for international crypto regulations?
This dispute highlights tensions in cross-border cryptocurrency enforcement, potentially affecting how nations handle seized digital assets and collaborate on blockchain investigations. It underscores the need for transparent forensic standards in global finance, as differing narratives from U.S. and Chinese authorities could influence future regulatory frameworks and trust in international crypto probes.
Key Takeaways
- Origin Dispute: CVERC claims the seized Bitcoin traces to the 2020 LuBian hack, not Chen Zhi’s alleged scams, backed by analyses from Elliptic and Arkham Intelligence.
- Fund Movements: The assets remained dormant for years post-theft, with ransom offers ignored, until 2024 transfers placed them in U.S. custody, now worth $13.2 billion.
- Expert Insights: TRM Labs’ Angela Ang suggests possible insider theft within Chen’s group, emphasizing the DOJ’s theory while noting gaps in how U.S. authorities obtained control.
Conclusion
The US Bitcoin seizure from the 2020 LuBian mining pool hack reveals deep geopolitical rifts in cryptocurrency governance, with China’s CVERC challenging the DOJ’s narrative on the funds’ origins tied to Chen Zhi’s Prince Group. As blockchain forensics from firms like TRM Labs, Elliptic, and Arkham Intelligence provide critical evidence, this case may set precedents for handling seized digital assets amid rising values and international disputes. Stakeholders should monitor developments closely, as they could reshape global crypto enforcement and foster greater transparency in cross-border investigations.
