China’s cybersecurity agency has accused the United States government of orchestrating a massive cryptocurrency theft, escalating tensions between the two nations over a $13 billion Bitcoin seizure tied to a Cambodian fraud network.
The Chinese National Computer Virus Emergency Response Center alleged in a report released last week that American intelligence agencies conducted a “state-level hacker operation” to steal 127,272 Bitcoin from the LuBian mining pool in December 2020. The stolen cryptocurrency, worth roughly $3.5 billion at the time, now is worth approximately $13 billion.
The US Department of Justice maintains it lawfully seized the Bitcoin as part of its largest forfeiture action in history, connected to charges against Chen Zhi, chairman of Cambodia’s Prince Holding Group. Federal prosecutors in Brooklyn unsealed an indictment in October charging Chen with wire fraud and money laundering conspiracy for allegedly operating forced-labor compounds that conducted “pig butchering” cryptocurrency fraud schemes.
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Chen, whose whereabouts remain unknown, faces up to 40 years in prison if convicted. The DOJ alleges his network trafficked workers and forced them to defraud victims of billions of dollars.
Chinese investigators point to the four-year dormancy of the stolen Bitcoin as evidence of government involvement rather than typical criminal activity. The cryptocurrency remained untouched in digital wallets until mid-2024, when someone transferred it to addresses that blockchain tracking firms later identified as US government-controlled.
“This is clearly not the behavior of a typical hacker eager to cash out for profits,” the Chinese report said, calling it a “classic ‘black eats black’ operation orchestrated by a state-level hacking organization.”
However, independent blockchain forensics firms, including Arkham Intelligence, Elliptic, and MilkSad, traced the theft to a technical vulnerability rather than an external hack. Their analysis shows the LuBian mining pool used a flawed random number generator with only 32-bit entropy, making wallet private keys vulnerable to brute-force attacks within hours.
The DOJ has not disclosed how it obtained access to the Bitcoin’s private keys. Federal prosecutors declined to comment on the methods used to gain control of the cryptocurrency.
After the 2020 theft, Chen and his associates sent more than 1,500 messages embedded in Bitcoin transactions, spending roughly 1.4 Bitcoin in fees to plead with the hackers to return the funds. The hackers never responded.
The dispute is China’s latest attempt to attribute major cyberattacks to the US. In October, Beijing accused Washington of exploiting vulnerabilities in Microsoft Exchange servers to target Chinese companies and claimed to have evidence of a US cyber attack on China’s National Time Service Center.
The Treasury Department and the United Kingdom jointly announced sanctions against 146 entities linked to Prince Holding Group in October, designating it a transnational criminal organization.
Information for this story was found via the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
