A four-year-old crypto theft has exploded into an international controversy after China accused the United States of covertly seizing more than 127,000 Bitcoins once stolen from a Chinese mining pool.
Key Takeaways:
- China accuses the U.S. government of taking control of 127,000 stolen Bitcoins from the 2020 LuBian mining pool hack.
- The U.S. denies hacking involvement, saying the funds were seized legally in a fraud and money laundering case.
- Blockchain data shows wallet movements beginning in mid-2024, fueling speculation about early U.S. control.
- Analysts warn the $13 billion dispute could add geopolitical volatility to crypto markets.
- The case deepens U.S.–China digital tensions, symbolizing a wider battle for control of blockchain power.
What began as a routine cyber investigation has morphed into a geopolitical standoff involving espionage allegations, digital sovereignty, and the world’s most valuable cryptocurrency.
From Cyber Heist to State-Level Accusation
In 2020, a mysterious breach drained the wallets of LuBian, a prominent Chinese Bitcoin mining collective. The stolen coins — worth roughly $13 billion at current prices — vanished into the blockchain’s dark maze. For years, investigators could only watch as the funds sat dormant.
Now, China’s National Computer Virus Emergency Response Center (CVERC) claims to have uncovered new evidence suggesting the hack was not the work of criminals, but of a government actor. In a report published through state media, Chinese officials alleged that the tools and tactics used in the 2020 breach were “identical to those employed by state-backed hackers,” implying direct U.S. involvement.
According to CVERC, the United States “intercepted and took possession” of the Bitcoin, using the guise of a criminal seizure to conceal a cyber operation.
The American Response
Washington has flatly rejected the accusation, calling it “false and politically motivated.” U.S. law enforcement officials say the Bitcoin was legally confiscated during a multi-jurisdictional investigation into Chen Zhi, a Cambodian businessman linked to crypto-related money laundering and online fraud.
“The funds were recovered through court-authorized seizures, not through hacking,” an American official said. The Justice Department insists the case involved cooperation with international agencies — not a covert mission.
But the timing of events has drawn scrutiny. After sitting untouched since 2020, the 127,000 BTC began moving across blockchain addresses in mid-2024. Within weeks, analysts from Arkham Intelligence flagged the wallets as U.S. government holdings, fueling speculation that the handover of assets had occurred much earlier than authorities had disclosed.
What the Blockchain Reveals
For China, those movements are the smoking gun. CVERC claims the transfers don’t match the pattern of a legal seizure, arguing that the U.S. may have been controlling the funds from the start. The agency also alleges that the operation reflects a broader trend — the weaponization of digital infrastructure by state powers under the guise of law enforcement.
Beijing’s narrative paints the incident as part of a larger struggle for digital dominance between two rival superpowers: the U.S., which commands the world’s most powerful forensic blockchain tools, and China, which sees itself as the main target of those capabilities.
A Symbol of Larger Tensions
The renewed dispute lands at a volatile moment in U.S.–China relations, already strained by trade frictions, semiconductor restrictions, and cybersecurity accusations. In Chinese state commentary, the Bitcoin saga has been described as “the perfect metaphor for digital imperialism.”
In Washington, officials dismiss that framing, saying the case simply exposes the global reach of financial crime and the need for governments to act when digital assets are used for fraud.
Still, analysts note that the political optics are explosive: both nations are effectively accusing each other of theft on the blockchain — a 21st-century version of Cold War espionage, but with crypto wallets instead of spy satellites.
Markets on Edge
Crypto commentators warn the fallout could shake investor confidence. “You’re looking at $13 billion in Bitcoin caught in a geopolitical crossfire,” said a trader known as Money Ape. “That’s not just a legal fight — it’s a liquidity shock waiting to happen.”
Others pointed out that large state-controlled Bitcoin movements often ripple through markets. If either side begins moving funds in retaliation or as part of a legal process, the effect on prices could be sudden and sharp.
Still, some traders see opportunity. “Volatility breeds profit,” one analyst wrote on X. “But only for those who can separate politics from panic.”
The Mystery Endures
Neither Beijing nor Washington has provided definitive on-chain evidence to support their claims, leaving the Bitcoin in question suspended in uncertainty — a digital ransom of sorts between two rival powers.
Whether the coins were stolen, seized, or secretly commandeered, one fact is clear: the LuBian hack has evolved from a cybercrime case into a diplomatic thriller that touches the core of digital sovereignty. And with 127,000 BTC still sitting in government-tagged wallets, the world may only be seeing the first act of the story.
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Source: https://coindoo.com/china-accuses-u-s-of-secretly-seizing-13b-in-stolen-bitcoin/