China Claims US Bitcoin Seizure a “Thieves’ Quarrel” Involving 127,000 BTC from 2020 Hack

China Claims US Stole $13 Billion In Bitcoin Using State-Level Cyber Operations

Tensions between Beijing and Washington have intensified after China accused the United States of orchestrating a massive bitcoin theft disguised as a law enforcement action.

According to the National Computer Virus Emergency Response Center (CVERC), the U.S. government seized 127,000 BTC, worth approximately $13 billion at current prices, in an operation they describe as a state-sponsored cyberattack rather than legitimate asset forfeiture.

Was The 2020 LuBian Hack A State Operation

The controversy centres on a December 2020 hack of the LuBian mining pool, where attackers drained over 127,000 bitcoin from the platform’s hot wallet.

CVERC’s report argues the attack bore hallmarks of state-level precision, noting the stolen coins remained dormant for nearly four years—an unusual pattern for typical cybercriminals.

The agency suggests that the delayed transfer and eventual seizure by U.S. authorities indicate direct involvement by Washington rather than ordinary law enforcement action.

US Links Bitcoin To Alleged Cambodian Fraud

The U.S. Department of Justice (DOJ) announced the seizure on 14 October 2025, tying the bitcoin to Chen Zhi, chairman of Cambodia’s Prince Group, who faces charges for allegedly running a multi-billion-dollar crypto fraud scheme.

DOJ officials describe the confiscation as standard legal procedure, claiming it was an asset forfeiture connected to Chen’s alleged criminal network.

CVERC rejects this narrative, describing the incident as a “thieves’ quarrel” and noting that only a small portion of the bitcoin had a questionable origin.

Their analysis indicated that roughly 17,800 BTC were mined independently, 2,300 BTC came from pool payments, and around 107,100 BTC were transferred from legitimate exchanges or platforms.

Dormant Bitcoins Suggest Government Involvement

The Chinese agency emphasises that the stolen coins’ inactivity over four years aligns with state-level operations rather than profit-driven cybercrime.

CVERC points to blockchain analytics from Arkham, linking the mid-2024 transfer of assets to wallets associated with the U.S. government.

This, they argue, contradicts the DOJ’s portrayal of the bitcoin as criminal proceeds and calls into question the legitimacy of the seizure.

Could Bitcoin Become A Geopolitical Tool

The dispute turns a sizeable portion of bitcoin—roughly 0.65 percent of circulating supply—into a potential diplomatic lever.

At Bitcoin’s peak in October 2025, the seized coins were worth over $16 billion.

Analysts warn that as tensions rise, such high-value holdings could influence markets or fuel geopolitical manoeuvring.

Naeem Aslam, Chief Investment Officer at Zaye Capital Markets, commented:

“Since blockchain data confirms transactions but not ownership rights, this confrontation could redefine the sovereignty of digital assets and the legitimacy of law enforcement.”

Calls For Stronger Blockchain Security

CVERC’s report urges the crypto industry to adopt more robust security measures, recommending cryptographically secure random number generators, multi-layered defence systems, cold storage, and real-time anomaly monitoring.

The agency’s detailed reconstruction of the LuBian hack highlights the risks digital assets face amid intensifying US-China competition over technology, cybersecurity, and blockchain governance.

US Response Remains Limited

As of now, the U.S. has not issued a formal response to China’s allegations.

The DOJ continues to maintain that the seizure was lawful and tied to anti-money laundering and fraud investigations.

Meanwhile, Beijing’s report frames the case as evidence of deliberate U.S. cyber interference, raising questions about how decentralised assets are treated when major powers clash.