The Chinese state cybersecurity watchdog, CVERC, has raised serious allegations against the U.S. government regarding the seizure of a substantial amount of Bitcoin. The watchdog claims that the U.S. unlawfully seized 127,271 BTC, initially linked to a mining pool hack in 2020, arguing that these assets are not associated with criminal activities tied to Cambodian businessman Chen Zhi.
According to a technical report released by CVERC, the Bitcoin was allegedly taken during a hack of the LuBian mining pool on December 29, 2020, when approximately 127,272.06 BTC—valued at about $3.5 billion at the time—was lost. The value of these coins has skyrocketed since then, reaching an estimated $13.2 billion today. Chen Zhi, who leads the Prince Group, has been accused by U.S. prosecutors of orchestrating a “pig-butchering” scam involving forced labor and cryptocurrency fraud.
After the hacking incident, CVERC asserts that Chen’s associates sent messages via blockchain in 2021 and 2022, purportedly offering a ransom for the recovery of the stolen funds. Notably, these coins remained untouched for four years before being transferred to wallets linked to U.S. control in mid-2024.
CVERC’s report contends that the U.S. might have unlawfully acquired these Bitcoins through cyber means back in 2020, framing the seizure as a typical “black-eats-black” operation carried out by a state-affiliated hacking entity. The report cites analyses from blockchain forensics firms, Elliptic and Arkham Intelligence, to support its claims that the seized Bitcoin originated from compromised mining activities in both China and Iran.
The allegations come on the heels of a significant event when, shortly after the U.S. Department of Justice (DOJ) announced the seizure on October 14, approximately $2 billion worth of Bitcoin was transferred into new wallets.
These claims were highlighted by the Global Times, an English-language tabloid aligned with the Chinese Communist Party. In response to the unfolding situation, Decrypt has sought comments from CVERC, the U.S. Treasury, and the U.S. DOJ, as well as confirmation from Elliptic and Arkham Intelligence.
TRM Labs, a blockchain intelligence firm, has confirmed that the seized Bitcoin indeed originated from 25 unhosted wallets controlled by Chen Zhi as of 2020. Angela Ang, head of policy and strategic partnerships for Asia Pacific at TRM Labs, mentioned that while the reasons for the movement of the funds remain unclear, the DOJ’s forfeiture complaint suggests that an insider might have stolen the assets.
Ang indicated that on-chain activity shows significant movements of these funds that took place between June and July 2024, following which the funds were taken into custody by U.S. authorities. Although Ang acknowledged the absence of concrete evidence regarding how U.S. authorities gained access to the identified wallets, she implied that the transactions could likely be connected to earlier movements of the stolen assets.
