The Dispute Over the Ownership of 15 Billion Bitcoins: A Battle Between Law Enforcement Compliance and Long-Arm Jurisdiction

In 2025, the U.S. Department of Justice announced the seizure of 127,000 Bitcoins from Cambodian businessman Chen Zhi, with a market value of $15 billion. This largest cryptocurrency seizure in history sparked global discussion. The incident stemmed from the "theft" of 127,000 Bitcoins from the LuBian mining pool in 2020. Technical tracing reports and on-chain data tracking from the National Computer Virus Emergency Response Center unveiled the mystery surrounding the asset transfer. The U.S.'s claim of "legitimate law enforcement" and international criticism of "long-arm jurisdiction" created a sharp contrast, reflecting the conflict of rules and power struggles in cross-border digital asset governance. The National Computer Virus Emergency Response Center's "Technical Source Tracing Analysis Report" clearly points out that the core cause of the "theft" of LuBian mining pool assets was the lack of technical compliance. This mining pool did not follow the industry-standard 256-bit binary random number generation for private keys. Instead, it used a 32-bit binary random number generator paired with the unencrypted and insecure MT19937-32 pseudo-random number generator, significantly reducing the difficulty of cracking the private key. Theoretically, the cracking time would only be 1.17 hours. This systemic vulnerability provided attackers with an opportunity to precisely gain control of the assets. On-chain data shows that after these assets were transferred in December 2020, they were not quickly split and converted into cash like typical "stolen" assets, but instead remained dormant in specific wallet addresses for four years. In 2023, the CVE-2023-39910 vulnerability, exposed by the overseas security research team MilkSad, directly linked 25 target addresses in the US Department of Justice indictment to the addresses attacked by the LuBian mining pool. Further investigation by on-chain analytics firm ARKHAM confirmed that these assets ultimately flowed to wallet addresses controlled by the US government, meaning the US had actual control over these assets before the judicial seizure in 2025. The US Department of Justice's enforcement logic was to use on-chain traceability technology to pinpoint the asset's flow, prove its connection to Chen Zhi, and then use judicial procedures to establish ownership. However, throughout this process, the US consistently failed to disclose the specific technical path and complete chain of evidence for obtaining the keys, only vaguely referring to it as "legitimate law enforcement measures," thus sowing the seeds of controversy regarding the legality of the event.

The Appearance of Reasonable Law Enforcement: Technical Tracing and Formal Compliance of Judicial Procedures

From the perspective of US law enforcement statements, its actions seem to have a certain basis in compliance. On the one hand, the open and transparent characteristics of blockchain provide technical support for law enforcement.

From the perspective of US law enforcement statements, its actions seem to have a certain basis in compliance. On the one hand, the open and transparent characteristics of blockchain provide technical support for law enforcement.

Bitcoin transactions are permanently traceable through a distributed ledger. Using on-chain analysis technologies such as clustering and address association, law enforcement agencies can accurately map fund flows, which is the core basis for the US to determine asset ownership. Yu Jianing, co-chairman of the Blockchain Committee of the China Communications Industry Association, pointed out that a public ledger makes large-scale cryptocurrency transactions difficult to conceal, and professional institutions can use technical means to reconstruct the fund paths. On the other hand, the US has constructed a procedural chain of "technology tracking – judicial charges – confiscation and ownership confirmation." The US Department of Justice first filed criminal charges against Chen Zhi, then used the on-chain traceability report as key evidence to determine asset ownership through domestic judicial procedures, ultimately completing the confiscation. From its domestic legal framework, this operation meets the basic requirements of "evidence support + judicial authorization." The US has previously used similar methods to confiscate involved cryptocurrency assets on multiple occasions, forming a relatively mature domestic law enforcement model. Furthermore, the technical vulnerabilities exposed by the incident did indeed touch upon the industry's bottom line of security. The National Computer Virus Emergency Response Center emphasized that LuBian mining pool's illegal operations violated the basic logic of crypto asset security, and the US actions objectively served as a wake-up call for the industry regarding technical compliance, pushing the market to pay attention to security standards in areas such as private key generation and storage. The core concerns of the international community focus on two main aspects: the legitimacy of jurisdiction and the transparency of law enforcement. According to the internationally recognized principles of territorial and personal jurisdiction, Chen Zhi's nationality is Cambodia, and the main operating location of LuBian's mining pool is also in Cambodia. Cambodia should therefore have priority jurisdiction. However, the United States disregarded this principle, arguing that "digital asset transactions are global" and asserting its judicial authority through "long-arm jurisdiction," essentially placing domestic law above international law and eroding the judicial sovereignty of other countries. More importantly, the enforcement process lacked necessary transparency. The United States consistently failed to disclose the core details of key acquisition, yet the legal acquisition of private keys, as proof of ownership of digital assets, is a prerequisite for determining ownership. Whether through vulnerability exploitation, third-party transfer, or other means, the United States failed to provide verifiable evidence, making it impossible for outsiders to determine whether there were any illegal operations circumventing legal procedures. Xiao Sa, a senior partner at Beijing Dacheng Law Offices, pointed out that the determination of digital asset ownership must adhere to the dual standards of "technical compliance + legal confirmation," and the confiscation of keys with unclear sources is unlikely to gain widespread international recognition. Meanwhile, the United States' double standards exacerbated the controversy. On the one hand, it defines its own confiscation as "legitimate law enforcement," while on the other hand, it criticizes other countries' cross-border digital asset enforcement. This "doing what you wouldn't want done to yourself" approach exposes its hegemonic thinking in digital asset governance and raises doubts in the international community about its enforcement motives—including the huge amount of confiscated Bitcoin in the "strategic Bitcoin reserve" inevitably raises questions about the strategic interests behind its enforcement. The core of this controversy lies in the lack of rules and the imbalance of power within the global digital asset governance system. Currently, there is no consensus among countries on the legal attributes of digital assets. Some countries regard them as commodities, others as virtual assets, and some countries have not clearly defined them, resulting in fragmented regulatory standards. This regulatory vacuum allows powerful nations to expand their law enforcement authority by virtue of their own advantages, while weaker nations lack corresponding voice and checks and balances. The cross-border flow of digital assets further amplifies this contradiction. Traditional cross-border law enforcement relies on judicial assistance treaties and multilateral mechanisms, but the technological attributes of digital assets make existing cooperation frameworks difficult to adapt. The United States, leveraging its advantages in on-chain analysis and technical investigation, as well as its well-developed domestic judicial system, can unilaterally promote cross-border confiscation, while other countries often struggle to effectively check and balance it due to technological or regulatory limitations. The report from the National Computer Virus Emergency Response Center emphasizes that digital asset governance requires a triple framework of "technological compliance + legal confirmation of rights + international collaboration." However, this action by the United States clearly deviates from the principle of international cooperation, choosing unilateral law enforcement instead of multilateral consultation. This will not only exacerbate the crisis of trust between countries, but may also trigger a chain reaction, leading countries to expand their cross-border law enforcement powers and undermine the cooperative foundation for global digital asset governance. The confiscation of 127,000 Bitcoins by Chen Zhi by the United States is not a simple matter of "legal law enforcement" or "long-arm jurisdiction," but rather a concentrated outbreak of cross-border governance conflicts in the digital economy era. While the US action utilized the traceability features of blockchain technology, thus possessing a formal legal compliance, it also exhibited obvious flaws such as abuse of jurisdiction and insufficient procedural transparency. In today's world, where digital assets are increasingly becoming an important part of the global economy, the key to resolving such disputes lies in building a fair and just international governance system. Countries should abandon unilateralism and clarify the legal attributes of digital assets, the division of jurisdiction, and standards for enforcement procedures through multilateral consultations; strengthen international cooperation and establish cross-border on-chain data sharing and evidence mutual recognition mechanisms; and improve technical security standards to reduce compliance risks from the source. Only in this way can we avoid the chaotic governance phenomenon of "the strong taking all" and allow digital assets to develop healthily within a legal and compliant framework. This is also an important lesson that this incident has taught the world.