A new flashpoint has emerged in the uneasy digital standoff between China and the United States, this time over one of the most mysterious and valuable crypto hacks in recent memory. China’s National Computer Virus Emergency Response Center (CVERC) has accused the U.S. government of effectively taking control of 127,000 stolen Bitcoin, worth around $13 billion today, in what it describes as a sophisticated, state-level cyber operation disguised as law enforcement. The allegations strike deep at the heart of ongoing geopolitical rivalries, technological espionage, and the increasingly blurred lines between hacking, intelligence gathering, and asset seizure in the blockchain era.
According to CVERC’s technical report, the roots of this saga trace back to 2020, when LuBian, a once-prominent Chinese Bitcoin mining pool, was struck by a complex cyberattack that drained tens of thousands of BTC. At the time, the breach was attributed to unknown attackers, and the stolen funds were believed to have connections to Chen Zhi, the high-profile chairman of Cambodia’s Prince Group, who has since been indicted in the U.S. for orchestrating large-scale crypto fraud and financial crimes. For nearly four years, the massive Bitcoin cache sat dormant across multiple wallets, untouched and largely forgotten, a digital ghost in the blockchain’s vast ledger.
That silence broke in mid-2024. Blockchain analysts began to notice unusual on-chain movements: the long-frozen LuBian-linked Bitcoin suddenly started shifting across addresses in a coordinated fashion. Soon after, data analytics firm Arkham Intelligence identified the recipient wallets as those under U.S. government control — a discovery that sparked quiet speculation across crypto circles but was never officially acknowledged. Now, China’s cybersecurity watchdog is claiming those transfers were not mere seizures of illicit funds, but rather the culmination of an American-led operation that began with the hack itself.
CVERC’s findings, amplified by the Chinese state-affiliated Global Times, outline a sequence suggesting that the same advanced hacking tools and techniques used in the 2020 breach later appeared in operations linked to U.S. cyber agencies. The report goes so far as to allege that the “law enforcement seizure” narrative presented by the U.S. Department of Justice may have been constructed to legitimize the final step in an elaborate digital heist — a bold accusation that effectively casts Washington as both investigator and perpetrator.
In its statement, CVERC describes the hacking operation as one employing “state-level cyber capabilities,” a phrase rarely used by Chinese authorities without political intent. The watchdog’s analysis claims that forensic signatures, server traces, and encrypted command patterns all point toward actors with the technical depth, resources, and global access typical of intelligence-backed cyber units. It asserts that after years of quiet control and monitoring, the same actors moved to consolidate the Bitcoin under U.S. custody through a staged seizure process disguised as criminal asset recovery.
For its part, the United States has maintained that the Bitcoin in question was seized legally as part of ongoing investigations into international financial crimes tied to Chen Zhi and the Prince Group network. Washington has long accused Chen of using crypto assets to launder billions across Southeast Asia through fake trading platforms, illegal casinos, and human trafficking-linked online operations. The Department of Justice has not commented directly on the new Chinese allegations but has previously emphasized that its digital asset seizures follow transparent legal procedures, including federal court warrants and blockchain traceability audits.
The contrast between these narratives is stark. China’s version paints the episode as a breach of sovereignty and a manipulation of the global financial system through covert cyber means, while the U.S. narrative portrays it as a straightforward act of justice in a criminal investigation. In truth, both frames tap into deeper geopolitical tensions over control of digital infrastructure and the information flows underpinning modern finance. To Beijing, the blockchain represents a frontier where U.S. dominance — via intelligence networks, analytics firms, and custodial control — must be challenged. To Washington, it’s a realm where national security, cybercrime enforcement, and global influence increasingly converge.
The timing of this report is equally notable. It comes amid a year of heightened cyber accusations on both sides. In recent months, U.S. agencies have accused Chinese hacking groups of infiltrating cloud service providers and critical infrastructure networks, while Beijing has repeatedly claimed that American cyber teams conduct surveillance through “digital Trojan horse” operations embedded in global internet architecture. The LuBian Bitcoin story, then, is not just about crypto theft — it’s a new theater in the growing digital cold war between the world’s two superpowers.
Beyond the politics, the sheer size of the alleged seizure is staggering. At current prices, 127,000 Bitcoin represents one of the largest single crypto troves in existence — larger than the holdings of most public companies and even greater than the reserves of several small nations. The movements of such a stash can influence markets, shift liquidity dynamics, and alter perceptions about how transparent or traceable Bitcoin truly is in state-level operations. That the world’s two biggest powers are now disputing control over it only deepens the intrigue surrounding digital sovereignty.
Blockchain analysts remain cautious in interpreting the evidence. Some independent researchers argue that Arkham’s tagging of the wallets as “U.S. government-controlled” could stem from prior seizures linked to other cases, not necessarily the LuBian hack. Others suggest that both governments could be partially correct — that the coins may have been stolen by one group but later intercepted and recovered through international collaboration. Still, the technical report from CVERC introduces enough ambiguity and political tone to make the truth increasingly difficult to disentangle.
For the broader crypto community, this episode revives old questions about who really controls the blockchain’s biggest prizes once governments get involved. The notion that states might hack, monitor, and then legally claim stolen digital assets blurs the traditional boundary between criminal seizure and covert acquisition. It challenges the long-held belief in crypto’s neutrality and decentralization — showing instead how political power, jurisdiction, and cybersecurity capability can redefine ownership in the digital realm.
As of now, the U.S. Treasury and Department of Justice have not issued official responses to the Chinese claims. Beijing’s narrative, however, has already begun circulating widely across state media channels, positioning the incident as another example of what it calls “American cyber hegemony.” Meanwhile, analysts are watching on-chain activity closely for any further movements from the wallets associated with the LuBian hack, aware that each transaction may carry geopolitical weight.
The mystery of the 127,000 Bitcoin may never be fully untangled. But one thing is certain — in a world where code, capital, and politics are increasingly entangled, even digital coins can become weapons of diplomacy. What began as a mining pool hack in 2020 has now evolved into a symbol of global cyber rivalry, where the lines between justice and espionage, theft and seizure, are as blurred as the encrypted trails that led here.
