China Accuses U.S. of Involvement in 127,000 BTC LuBian Mining Pool Hack

The National Computer Virus Emergency Response Center (CVERC), China’s cybersecurity watchdog, has accused the U.S. government of proliferating a high-profile crypto heist. The case in question is the 2020 exploit of a Chinese bitcoin mining pool, which resulted in hackers stealing more than 127,000 BTC. Those assets are now worth over $13 billion.

The agency released a technical report on Sunday claiming that the bitcoin seized by the U.S. Department of Justice (DoJ) last year originally belonged to the LuBian mining pool. At the time of the attack, LuBian, which operated from China and Iran, was one of the largest bitcoin mining pools. It once controlled almost 6% of the Bitcoin network’s total hash rate.

China Accuses U.S. Government of Involvement in 2020 LuBian Mining Pool Hack, 127,000 BTC Seized

CVERC claims the attack was carried out with advanced tools, suggesting that it had the fingerprints of a “state-level hacking organization,” and the U.S. government’s seizure was part of a larger operation involving the same attackers.

The culprit behind the attack was Chen Zhi, chairman of Cambodia’s Price Group, who is currently under indictment by U.S. authorities for his involvement in a large-scale crypto fraud scheme. The hack, which occurred five years ago, flew under the radar for most of that time, while the stolen bitcoins remained untouched until last year.

In mid-2024, the bitcoins were quietly moved to new wallets, which blockchain analysis firm Arkham Intelligence later tagged to the U.S. government. The federal government claimed that the funds were criminal proceeds, but CVERC’s analysis challenges that argument. The Chinese agency suggested that the seizure may have been the final step in a larger operation involving the same attackers behind the original theft.

The DoJ dismissed China’s claims, maintaining that the seizure was a legitimate law enforcement operation targeting illegal cryptocurrency-related activities.

Arkham Intelligence Investigation Revealed That More Than 90% of LuBian’s Bitcoin Holdings Were Stolen in the Breach

The incident remained unnoticed for years, with neither LuBian nor the attacker disclosing the breach. Arkham conducted an investigation and uncovered that 127,426 BTC was stolen from the mining pool, which accounted for more than 90% of LuBian’s bitcoin holdings.

On-chain data shows that the breach took place over two days, from December 28 to December 29, 2020. At the time, the bitcoins were worth $3.5 billion. The same assets are worth $13.41 billion at the current rate of $105,268 per BTC.

Following the hack, the LuBian team tried to contact the hacker using the Bitcoin network’s OP_RETURN feature. They sent 1,400 BTC across 1,516 messages requesting the culprit to return the funds and offering a reward, to no avail.

LuBian Employed Weak Wallet Codes That Were Already At Risk

Akrham’s investigation revealed that the root cause of the exploit was the generation of weak private keys. They assessed that LuBian’s algorithms were probably vulnerable to brute-force attacks. One report linked the hack to an issue with the mining pool’s Trust Wallet code. This code, based on a 32-bit entropy, has been targeted in the past, and similar methods were used to exploit thousands of older Bitcoin wallets.

Despite the massive breach, LuBian managed to protect 11,886 BTC that remained in its pool, which are currently worth about $1.25 billion.

China’s accusation has further escalated its ongoing tension with the U.S. While the U.S. government disputed the CVERC’s claims that it was part of the high-profile hack, the DoJ maintained that the asset seizure was part of a standard law enforcement action targeting criminal proceeds.

At the time of writing, Bitcoin (BTC) is trading at $105,268 – down 1.02% in 24 hours.

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