US government wallet hacked for $20 million in crypto
Over $20 million worth of stablecoins and Ethereum was mysteriously moved from a wallet controlled by the United States government. This wallet contained funds tied to the notorious Bitfinex hack, sparking speculation and concerns of a potential theft.
Recent movement of seized funds
On a recent Thursday, over $20 million worth of assets, including stablecoins like Tether and USDC, and Ethereum, were transferred from a government-controlled wallet. This unexpected movement was quickly highlighted by blockchain analytics firm Arkham Intelligence, raising alarms across the crypto community.
Arkham Intelligence, a leading blockchain analytics firm, was the first to shed light on the situation. In a tweet, they mentioned that this was the first activity from the government-controlled wallet in over eight months. They highlighted significant withdrawals from the lending protocol Aave, where $1.25 million of Tether and $5.5 million of USDC were withdrawn.
In 2016, the cryptocurrency exchange Bitfinex suffered a major security breach, resulting in the theft of roughly 120,000 Bitcoins. The stolen Bitcoins were worth approximately $72 million back then. As the funds flowed out, more than $13.7 million of aUSDC, an interest-bearing token on Aave, and $446,000 worth of Ethereum were included in the transfers.
Years after the hack, in August 2023, the authorities arrested a married couple, Ilya Lichtenstein and Heather Morgan, in New York City. With the arrest, the U.S. government seized over $3.6 billion in digital assets, which were subsequently secured in government-controlled wallets.
Suspicious activity
Prominent on-chain sleuth ZachXBT expressed concern, describing the activity as “nefarious.” His investigation revealed that the newly funded wallet started using 1inch, an exchange aggregator, to swap stablecoins for Ethereum. These movements, combined with the lack of explanation from authorities, have led many to speculate that this could be a coordinated theft.
Further deepening the mystery, some of the funds were transferred to addresses connected to Binance. However, ZachXBT clarified that these addresses were likely linked to a “nested exchange” using Binance’s liquidity rather than directly to the leading exchange itself.
In response to the recent transfers, the Department of Justice (DOJ) has not yet provided any statements or clarifications, leaving the crypto community in suspense. The silence from the authorities only fuels speculation about the nature of the transfers and potential motives behind them.
If this transfer is indeed unauthorised, it could spark renewed concerns over security, regulations, and the role of centralised exchanges. For investors, it’s yet another reminder of the complexities and risks that come with investing in digital assets.
