A serious diplomatic and digital dispute is raging between China and the United States over a large amount of Bitcoin. The National Computer Virus Emergency Response Center of China (CVERC), a state cybersecurity agency, has made a shocking allegation that the U.S. government illegally seized Bitcoin worth billions of dollars.
CVERC claims that this asset originates from a coin mining pool hack in 2020, not from money obtained through the criminal activities of entrepreneur #Campuchia Chen Zhi, as alleged by the U.S. Department of Justice (DOJ).
Technical Allegation Content
In a technical report published on Sunday, CVERC directly challenged the DOJ's explanation of the asset seizure. The DOJ had previously accused Chen Zhi, the chairman of Prince Group, of running a large-scale 'pig-butchering' scam involving forced labor and cryptocurrency fraud.
CVERC claims that on December 29, 2020, the LuBian mining pool was attacked, resulting in a loss of 127.272.06 BTC. At that time, this amount of Bitcoin was worth approximately $3.5 billion USD, but its current value has skyrocketed to $13.2 billion USD. This amount is believed to belong to Chen Zhi.
CVERC's allegations culminate when they state that the U.S. government 'may have stolen 127,000 bitcoins held by Chen Zhi through hacking techniques since 2020, making [the seizure] a typical 'black eats black' operation staged by a state-sponsored hacking organization,' according to the Mandarin translation.
CVERC provides evidence based on cross-referencing addresses: they argue that the addresses listed in the DOJ's indictment against Chen Zhi match the addresses in the 2020 LuBian hack. The agency cites analyses from Elliptic and Arkham Intelligence to support the claim that the seized funds originated from compromised mining activities in China and Iran.
Blurred Boundaries: Hack or Legal Seizure?
Other reports provide a more complex view of the event. TRM Labs, a blockchain intelligence company, confirmed to Decrypt that the seized Bitcoin 'originated from 25 non-custodial wallets controlled by Chen as of 2020.'
Angela Ang, head of policy and strategic partnerships for the Asia-Pacific region at TRM Labs, stated: 'While we do not know for sure how or why they were transferred out of Chen's wallet, the DOJ's seizure complaint suggests a hypothesis about what happened, at least from Prince Group's perspective: an insider stole that money.'
TRM Labs also points out that on-chain activity shows the next significant movement of these funds is between June and July 2024. Currently, these funds are under the oversight of the U.S. government. Ang suggests that the transactions in 2024 'may represent the transfer of those assets into their ownership.'
However, Ang acknowledges the limitations in accurately determining how U.S. authorities gained access to or control over these wallets.
Despite the technical ambiguity, this allegation, first reported by the Global Times (a newspaper run by the Chinese Communist Party), has created a new confrontation, highlighting the deep-seated distrust between the two powers regarding global cybersecurity and digital financial issues. #anhbacong
