U.S. Seizes 127,000 BTC From 2020 Mining-Pool Hack — China Labels It “Theft”

A long-dormant Bitcoin heist has erupted into a geopolitical dispute after China’s Cybersecurity Administration accused the U.S. government of “illegally seizing” 127,000 BTC — worth roughly $13 billion at current market value.
The digital assets, allegedly tied to the LuBian mining-pool hack of 2020, were confiscated by U.S. authorities in a multi-year investigation that traced stolen funds across dozens of wallets and mixers.

The dispute has now taken a political turn — with Beijing calling the move a “sovereign asset theft,” and Washington describing it as a lawful seizure of criminal proceeds.

You can explore more major investigations and geopolitical updates in our dedicated Bitcoin News section — featuring on-chain forensics, institutional actions, and policy-driven narratives shaping the future of crypto assets.

🧩 Timeline of a $13 Billion Mystery

According to on-chain data tracked by Arkham Intelligence and CryptoQuant, several large transfers totaling 8,000–10,000 BTC per batch began flowing into wallets linked to known U.S. enforcement agencies by early 2024.

While the DOJ described the assets as “criminal proceeds tied to cyber operations,” the Global Times, China’s state-owned newspaper, claims the Bitcoin originated from Chinese entities operating legally before the national mining ban and should therefore fall under “Chinese jurisdiction.”

⚖️ The Legal and Political Clash

The U.S. government’s seizure was executed under anti-money laundering (AML) and cybercrime statutes, coordinated with blockchain tracing partners like Chainalysis.
However, Chinese authorities are framing the move as “financial aggression” — alleging the U.S. has taken advantage of “jurisdictional grey zones” to expand digital asset control.

“The unlawful confiscation of sovereign digital property sets a dangerous precedent,” said a spokesperson for China’s Cybersecurity Administration.
“Bitcoin is a neutral technology, yet the U.S. continues to politicize it for global leverage.”

Meanwhile, U.S. officials counter that the seizure was conducted through international cooperation agreements and that “no Chinese government or state-linked entity has legal claim” over the assets.

Crypto analysts note that this controversy highlights the emerging geopolitics of Bitcoin custody — where nation-states now view control of large BTC reserves as a strategic advantage in the digital era.

🌍 Geopolitical Undercurrents: Bitcoin as Digital Leverage

This latest confrontation reveals how Bitcoin has evolved beyond markets into state-level strategy.
Just as gold once defined geopolitical power, on-chain reserves are becoming a tool of influence.

Analysts point out that the U.S. government now holds over 215,000 BTC from past seizures (Silk Road, Bitfinex, and now LuBian), positioning it among the world’s largest single holders of Bitcoin — rivaling institutional treasuries such as MicroStrategy and Tether.

“Control over Bitcoin liquidity equates to soft power in the digital age,” said a researcher at the Blockchain Policy Institute.
“This dispute underscores how financial sovereignty and cyber law are colliding.”

According to recent Bitcoin News reports, the U.S. Treasury has intermittently sold small tranches of seized BTC via auctions, a move closely tracked by markets for its impact on liquidity and sentiment.

🔍 On-Chain Forensics and the 2020 LuBian Hack

Blockchain records indicate that the LuBian mining pool suffered a coordinated breach in 2020, when insiders allegedly exploited private key vulnerabilities in its cold wallets. The stolen 127,000 BTC were distributed across over 600 addresses, many of which stayed inactive for nearly three years.

Investigators identified several wallet clusters with identical withdrawal patterns — consistent with scripted automation used by large-scale laundering operations.
Forensics teams traced part of the BTC through Wasabi and ChipMixer, but a significant amount was funneled through privacy networks before resurfacing in late 2023.

Data dashboards from Glassnode and Arkham Intelligence show wallet consolidations between February and April 2024, suggesting that U.S. law enforcement had already begun recovery operations months before the public announcement.

🧭 Long-Term Outlook: A New Era of Digital Asset Diplomacy

The LuBian case may set a precedent for how governments handle cross-border crypto confiscations.
With more than $30 billion in digital assets seized globally over the past five years, policymakers are facing new questions:

• Who “owns” crypto seized abroad if the victims or entities are foreign?
• Can Bitcoin holdings be considered part of national reserves?
• Will future conflicts extend into on-chain warfare, where state actors compete for control over blockchain-based assets?

Experts predict that Bitcoin diplomacy could become a defining issue in the next decade, particularly as CBDCs (Central Bank Digital Currencies) and decentralized economies intersect.

For more analysis on state-level Bitcoin activity and digital sovereignty, visit our Cryptocurrency News section.

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