U.S. Government’s Alleged $20M Wallet Breach Raises Alarm, Majority of Funds Returned Shortly
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$20 Million Stolen in Crypto Heist?
A staggering $20 million in cryptocurrency has reportedly been siphoned from an Ethereum wallet controlled by the U.S. government, raising serious questions about the security of seized digital assets.
According to the on-chain intelligence platform Arkham, $20 million worth of assets—including USDC, aUSDC, USDT, and ETH—were mysteriously transferred on Oct. 24 from a wallet previously linked to federal seizures of funds connected to the infamous 2016 Bitfinex hack. This suspicious movement flagged by Arkham has led to speculation that the assets were stolen and are being actively laundered.
Arkham’s investigation pointed out that the funds were directed to wallet address 0x348, which has since been systematically selling the stolen assets for ETH. The suspicious transfers, Arkham noted, also included approximately $6.52 million worth of stablecoins withdrawn from the Aave lending protocol, indicating that the U.S. government had been earning interest on these assets.
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On-chain sleuth ZachXBT independently confirmed the possibility of theft, observing that the funds are likely being laundered across multiple crypto exchanges, including Nexchange, Switchain, and an exchange that operates via Binance’s liquidity network.
At present, the hacker’s wallet is holding roughly $13.2 million in assets, primarily in aUSDC—USDC tokens deposited in the Aave protocol—suggesting the stolen assets are slowly being liquidated or repositioned. These assets are reported to include 13.7 million aUSDC, 5.45 million USDC, 1.12 million USDT, and nearly half a million dollars in ETH.
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This breach casts a spotlight on the federal government’s massive crypto holdings, totaling over $14 billion, with a vast majority held in Bitcoin.
UPDATE: At the time of writing, most of the stolen funds, roughly $19 million, were recently returned, although the recovery effort remains incomplete as certain exchanges, such as Switchain and HitBTC, have yet to return transferred funds.
Adding complexity to the situation, on-chain analyst Ergo BTC identified inconsistencies in Bitfinex forfeiture documents, pointing out discrepancies between reported seizures and actual on-chain transactions. These discrepancies not only emphasize potential miscommunication but also highlight vulnerabilities in the security and tracking of assets seized by government entities.
This article has been refined and enhanced by ChatGPT.
