A significant controversy has arisen between China and the United States concerning the ownership of 127,000 bitcoin (BTC), which is currently valued at around $13 billion. This bitcoin was originally taken from the LuBian mining pool during a hack in 2020.
The Chinese government, through its National Computer Virus Emergency Response Center (CVERC), has publicly accused the U.S. of seizing these bitcoins, claiming that they were stolen in a cyberattack. The CVERC report alleges that a “state-level hacking organization” conducted the initial theft and implies U.S. complicity in both the hacking incident and the subsequent seizure of the assets.
The state-run media outlet Global Times has spotlighted CVERC’s analysis, which suggests the use of sophisticated hacking tools indicative of a state-sponsored operation, rather than typical criminal activity.
In response, the U.S. government has firmly denied these allegations. Officials assert that the seizure of bitcoins in 2024 was part of a law enforcement effort targeting assets connected to Chen Zhi, the chairman of Cambodia’s Prince Group, who faces charges of fraud and money laundering.
Researchers from independent blockchain analysis groups have traced the original outflow of funds from the LuBian wallets to vulnerabilities in Bitcoin’s key generation process, explaining how an unidentified entity managed to access and remove the bitcoins.
Forensic examinations conducted by firms such as Arkham and MilkSad have linked the seized bitcoins to vulnerable wallets but have refrained from attributing the original hack to any specific nation-state.
On-chain data demonstrates that the stolen coins remained inactive for several years before being funneled into wallets that are now identified as controlled by the U.S. government. Technical reviews point to flawed random number generation in the wallet keys, which rendered them vulnerable to brute-force attacks.
The U.S. Department of Justice has pursued forfeiture proceedings regarding the seized bitcoins, labeling them as criminal proceeds linked to illicit activities.
The debate continues over the attribution of the hack and the subsequent seizure. While Chinese officials suggest that the U.S. custodianship of the bitcoin indicates potential state involvement in the original cyberattack, analysts in the West emphasize the absence of concrete evidence supporting this claim. On-chain forensic data suggests that the movements of the bitcoins are more consistent with exploitation of weak key generation rather than definitive action by state actors. The question of who was responsible for draining the wallets still remains unanswered.
