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China Accuses U.S. of Secret Role in $4B Bitcoin Hack – What’s Really Going On?

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China has accused the United States of covert involvement in what’s now thought-about one of the most important Bitcoin thefts in historical past, a $4 billion hack relationship again to 2020 that has developed right into a geopolitical dispute over digital belongings.

The controversy facilities on the LuBian mining pool, a China-based Bitcoin collective that suffered a significant breach on December 29, 2020, losing 127,272 BTC, then valued at roughly $3.5 billion.

The cash, owned by Chen Zhi of Cambodia’s Prince Group, remained dormant for almost 4 years till the U.S. Department of Justice (DOJ) announced in October 2025 that it had seized 127,000 BTC and charged Chen.

Did Washington Crack the LuBian Hack? Blockchain Forensics Hint at a Hidden Operation

Chinese commentators and blockchain analysts argue that the seized Bitcoin could be the identical because the LuBian funds, implying American authorities might have accessed them years earlier by way of a covert operation.

Blockchain forensics from Arkham Intelligence and Elliptic present that pockets addresses in the DOJ’s indictment match these linked to the 2020 LuBian hack.

On-chain information point out that on the day of the assault, LuBian’s major pockets transferred 127,272 BTC to an unknown handle, almost the identical quantity later seized by U.S. officers.

The 2020 breach exploited a flaw in LuBian’s 32-bit pseudo-random key generator, just like the “MilkSad” cryptographic flaw revealed in 2023.

Source: Weixin

The defect made it potential for attackers to brute-force 1000’s of pockets keys inside hours, draining greater than 90% of LuBian’s holdings.

For years, the stolen Bitcoin remained unmoved. LuBian and Chen Zhi despatched over 1,500 messages through Bitcoin’s OP_RETURN operate in 2021 and 2022, pleading with the hackers to return the belongings and providing a ransom. No response was ever obtained.

In June 2024, blockchain trackers noticed renewed motion from the dormant wallets. About 127,000 BTC have been transferred to new addresses, later tagged by Arkham as belonging to the U.S. authorities.

The DOJ’s announcement of the seizure got here months later, a sequence that Chinese observers say raises questions on when and the way the U.S. obtained entry to the non-public keys.

The DOJ has not disclosed its technical strategies however claims the belongings have been “linked to illicit operations and laundered by way of mining networks working in China and Iran.”

However, on-chain information reviewed by analysts suggests the funds originated instantly from LuBian’s compromised wallets.

Dormant LuBian Wallets Move $3.1B in Bitcoin Amid U.S. Enforcement Pressure

Adding to the confusion, LuBian-linked wallets have proven new exercise because the DOJ’s announcement. On October 15, blockchain monitoring agency Lookonchain reported {that a} long-dormant handle moved 11,886 BTC (about $1.3 billion) to several new wallets.

Every week later, on October 22, one other 15,959 BTC (value $1.83 billion) was transferred to four additional wallets, in response to OnChainLens.

Analysts debate whether or not the transfers are defensive strikes or reallocations forward of potential liquidation.

All associated wallets stay sanctioned, and Chen Zhi’s whereabouts are presently unknown. The LuBian case has grow to be a cautionary story for DeFi and crypto infrastructure safety, and the hack has grow to be a reference level for crypto’s early safety failures.

The incident exhibits the risks of weak random quantity era, additionally affecting companies like Wintermute, which misplaced $160 million in 2022 on account of comparable vulnerabilities.

Meanwhile, each the U.S. and the U.Okay. have been concerned in separate large-scale Bitcoin seizures tied to Chinese-linked operations.

In a parallel case, British authorities are managing a £5 billion ($7.2 billion) Bitcoin trove confiscated in 2018 from Chinese fraud suspects.

The U.Okay. High Court is presently deciding whether to return the funds to 130,000 Chinese investors or retain most of the proceeds for the federal government.

The publish China Accuses U.S. of Secret Role in $4B Bitcoin Hack – What’s Really Going On? appeared first on Cryptonews.

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