Beijing’s Cyber Agency Alleges U.S. Involvement in Massive Bitcoin Seizur
China has accused the United States of seizing nearly $13 billion worth of Bitcoin linked to the 2020 LuBian mining pool hack, calling it a “state-level cyber operation disguised as law enforcement.” The allegations come from the Chinese National Computer Virus Emergency Response Center (CVERC), which released a report on Sunday claiming that 127,272 BTC-originally stolen from LuBian-ended up under U.S. government control after a four-year covert operation.
According to the report, the coins were initially held by Chen Zhi, head of Prince Group in Cambodia, who spent years trying to recover them through blockchain messages and ransom offers. Chen reportedly embedded over 1,500 messages into the Bitcoin blockchain, pleading for their return - including one reading, “Please return our funds, we’ll pay a reward.” None received a reply.
A Vulnerability That Opened the Door
CVERC said the LuBian hack stemmed from a critical flaw in its key-generation system. Instead of using proper 256-bit cryptographic randomness, LuBian allegedly used a 32-bit pseudo-random number generator based on the Mersenne Twister MT19937-32 algorithm, giving hackers just 4.29 billion possible combinations to brute-force - far below cryptographic security standards.
The weakness mirrors the “MilkSad” vulnerability (CVE-2023-39910) disclosed in 2023, which exposed numerous wallets using similar key-generation methods. CVERC stated that once the flaw was found, the breach took less than two hours, affecting over 5,000 wallets that lacked multisig or hardware security.
The attack drained 127,272 BTC (worth $3.5 billion in 2020) from LuBian’s non-custodial wallets on December 29, 2020, leaving behind fewer than 200 BTC. The funds then sat dormant for nearly four years before moving again in mid-2024.
From Dormant Wallets to DOJ Control
According to the report, blockchain analysis firm Arkham later identified the destination addresses as government-controlled, matching those in the U.S. Department of Justice’s October 2024 indictment against Chen Zhi.
The DOJ seized the same 127,271 BTC across 25 wallets, claiming they were proceeds of illicit mining and exchange activities.
The CVERC claims that the U.S. “used technical means” to intercept, seize, and reassign the coins under a law enforcement pretext, framing it as a takedown of Chen’s operations while actually appropriating the Bitcoin for itself.
Fallout and Warnings for the Global Crypto Industry
The LuBian mining pool, once a major player in China and Iran, collapsed after the attack, losing over 90% of its assets.
The report has sparked heated online discussion across Chinese social media and tech forums, with some users calling it a “digital sovereignty incident” and others urging international verification of blockchain data to validate the claims.
As of now, the U.S. Department of Justice has not commented on the allegations. If verified, this would mark one of the largest cryptocurrency seizures-and geopolitical digital confrontations-in history.
