Global Digital Asset Dispute Intensifies After Asset Seizure
China’s National Computer Virus Emergency Response Center (CVERC) triggered the global digital asset dispute on November 10, 2025, after accusing the United States of conducting a state-backed cyber operation that stole 127,272 Bitcoin from the LuBian mining pool in December 2020. The U.S. Department of Justice rejected the allegation immediately, asserting that the assets were lawfully seized as criminal proceeds tied to a transnational “pig butchering” network allegedly operated by Cambodian businessman Chen Zhi.
The confrontation marks the first direct accusation by Beijing against Washington over a cryptocurrency-related operation, pushing their rivalry into a new digital frontier. It also exposes a deeper struggle for dominance in blockchain governance and digital sovereignty. Bloomberg’s report on November 11, 2025, thrust the case into the international spotlight, transforming what began as a mysterious hack into a defining moment in the global power contest over control of the cryptocurrency landscape.
Bloomberg’s Original Report and Detailed Developments
Bloomberg published the report “China Accuses US of Orchestrating $13 Billion Bitcoin Hack” on November 11, 2025, citing a technical document from CVERC, a state-backed Chinese cybersecurity agency. The article described the case as “China’s latest attempt to link major cyberattacks to the United States” and “one of the largest cryptocurrency heists in history.”
At the center of the story was the breach of LuBian Bitcoin Mining Pool, which occurred between December 28 and 29, 2020. At that time, LuBian ranked among the largest mining pools in the world, holding roughly 6% of global Bitcoin hashrate. Attackers stole 127,272.07 BTC, worth about $3.5 billion then, more than 90% of LuBian’s total reserves. As Bitcoin’s price surged over the following years, the value of the stolen funds ballooned to more than $16 billion at the October 2025 peak and now fluctuates near $13–14.5 billion, depending on market conditions.
However, what puzzled investigators most was the silence that followed. The stolen Bitcoin remained untouched for nearly four years. During that period, LuBian and its parent company, Prince Group, led by Chen Zhi, embedded over 1,500 messages directly into blockchain transactions, pleading for the return of their assets. Around 1.4 BTC, worth more than $40,000, was spent to send these messages through Bitcoin’s OP_RETURN function, with short appeals such as “Please return our money. We will pay a reward.” None ever received a response.
Eventually, movement began in July 2024. A massive transfer of 127,460 BTC left an address identified by Arkham Intelligence, a blockchain analytics firm, as “LuBian.com Hacker” and moved to another labeled “US Government: Chen Zhi Seized Funds.” The transfer marked the first visible sign that American authorities had gained control of the stolen Bitcoin.
Moreover, official confirmation came more than a year later. On October 14, 2025, the Department of Justice formally announced the seizure during a high-profile press briefing. Attorney General Pamela Bondi hailed it as “one of the most significant blows ever dealt against international human trafficking and online financial fraud.” FBI Director Kash Patel added, “The FBI and our partners have executed one of the largest financial crime takedowns in history.”
In response, the DOJ filed a civil forfeiture case involving 127,271 BTC, valued at approximately $15 billion, calling it “the largest asset forfeiture ever undertaken by the Department of Justice.” Prosecutors also charged Chen Zhi, a 37-year-old Cambodian-British national, with wire fraud and money laundering.
The announcement transformed what had long seemed a mysterious cyber theft into one of the most politically charged financial stories of the decade: one that now stands at the intersection of law enforcement, technology, and geopolitics.
China’s Specific Accusations and US Response
China issued its strongest accusations through a technical report released by CVERC on November 9–10, 2025, later amplified by the Global Times, a state-owned newspaper under People’s Daily. The report described the case as “a typical scenario of thieves robbing thieves, orchestrated by a state-level hacking organization.”
According to CVERC, “the US government likely stole Chen Zhi’s 127,000 Bitcoin as early as 2020 using advanced hacking techniques.”
CVERC’s main arguments focused on three anomalies below:
1. Dormancy of the stolen Bitcoin
The four-year inactivity of the funds “does not align with ordinary hacker behavior.” CVERC explained that typical criminals convert stolen coins into cash quickly, while the prolonged silence suggested a “carefully planned, state-backed operation.”
2. Sophistication of the attack
The tools and exploits used in the breach showed highly advanced capabilities “far beyond the reach of criminal organizations.” Investigators pointed to unpublished firmware vulnerabilities that only government-level actors could access.
3. Suspicious timing
The Bitcoin transfers to US-controlled wallets in July 2024 coincided with DOJ investigative procedures, yet the official announcement came in October 2025. CVERC described the fifteen-month gap as “difficult to justify” and “indicative of hidden coordination.”
CVERC highlighted a critical gap in the American narrative. The US government never explained in its indictment how it gained access to Bitcoin’s private keys. Controlling Bitcoin requires possession of these unique 64-character cryptographic strings, the only way to authorize transactions or move funds. Without them, access is impossible. CVERC argued the United States may have taken control of the Bitcoin as early as December 2020, long before any public announcement, and later presented the “seizure” as a legal act to justify ownership of already captured assets.
The official response from Washington has remained deliberately vague. Reports from international media quoted unnamed officials denying China’s claims and insisting the seizure complied with lawful procedures against illicit funds. However, no public statements have come from the State Department, Treasury, or Department of Justice addressing CVERC’s accusations directly. CoinDesk noted that inquiries sent to both the Treasury and DOJ received no reply. Decrypt confirmed the same silence from all parties involved, including CVERC itself.
Meanwhile, the DOJ’s October 2025 legal filings outlined the American position in firm terms. The department described the Bitcoin as “proceeds and instrumentalities of the defendant’s fraud and money laundering conspiracies,” stored in unhosted wallets under Chen Zhi’s control. The indictment tied the assets to a vast network of “pig butchering” scams: forced-labor compounds across Cambodia that lured victims into fraudulent cryptocurrency investments.
According to the FBI, crypto investment scams caused $5.8 billion in losses during 2024 alone. More than 250 victims in the United States were linked to Chen’s Brooklyn-based network, collectively losing $18 million.
The lack of transparency, combined with contrasting narratives from both governments, has blurred the line between criminal enforcement and cyber confrontation: turning a financial investigation into a test of power, trust, and digital sovereignty.
Parties Involved and Complex Background
Chen Zhi, the key figure at the center of the case, is the chairman of Prince Holding Group, a Cambodian conglomerate with operations spanning more than 30 countries. On paper, the group runs businesses in real estate, finance, and consumer services. In reality, according to the US Department of Justice, it serves as a front for a vast criminal network involving forced labor, crypto scams, human trafficking, torture, and large-scale money laundering. Chen remains at large. His location is unknown, and he faces up to 40 years in prison if convicted.
LuBian Bitcoin Mining Pool, founded in April 2020, quickly grew into one of the world’s largest mining pools, at one point controlling around 6% of global Bitcoin hashrate. The company promoted itself as “the world’s safest mining pool with the highest profits.” LuBian operated across both China and Iran which detail that later proved important, as Iran’s sanction status may have given the United States additional grounds for seizing any related assets.
After the December 2020 hack, LuBian vanished from the Bitcoin network. Operations stopped in February 2021, and its final mining activity appeared on March 1, 2021.
Later investigations revealed the technical flaw behind the collapse. Analysts from Arkham Intelligence, Elliptic, and other blockchain research firms found that LuBian relied on a weak private key generation system, based on 32-bit cryptography easily exposed to brute-force attacks. The vulnerability corresponded to CVE-2023-39910, a well-documented flaw involving poor random number generation that left wallets open to decryption by attackers.
According to technical reports, hackers took advantage of this weakness and drained 127,272 BTC in less than two hours. Every transaction carried identical fees, a sign the attack had been executed automatically through batch scripts.
What began as a technical failure inside a mining pool has since evolved into one of the most politically charged and geopolitically sensitive events in Bitcoin’s history.
Crypto Expert and Blockchain Analysis Opinions
The crypto community remains deeply divided, revealing how complex and politically sensitive the case has become.
CoinDesk, one of the industry’s most established outlets, reported the stolen Bitcoin had stayed untouched for almost four years. The breach attracted little notice until Arkham Intelligence exposed it in August 2024. CoinTelegraph echoed the view from CVERC, noting the unusual dormancy before the US seizure suggested more than a simple criminal act. The pattern appeared methodical and deliberate, similar to operations run by state-backed groups.
Further analysis came from leading blockchain intelligence firms. Arkham Intelligence released its full findings in August 2025, revealing 127,426 BTC had been drained from LuBian’s wallets in late December 2020, wiping out over 90% of its total reserves. On-chain data showed a major shift on July 5, 2024, when an address tagged “LuBian.com Hacker” transferred 120,576 BTC to another wallet labeled “US Government: Chen Zhi Seized Funds.”
Some analysts urged caution. Elliptic, a respected blockchain forensics company, stated the available data offered no clear explanation for how the Bitcoin came under US control. The company suggested an opportunistic actor could have exploited LuBian’s weak system before the funds drew law enforcement attention. According to Elliptic, the breach stemmed from a flawed key-generation process using 32-bit cryptography, a setup easily exposed to brute-force attacks.
From a legal standpoint, Angela Ang, Head of Policy and Strategic Relations for Asia-Pacific at TRM Labs, viewed the case differently. She said the DOJ’s forfeiture documents implied internal involvement. Her review showed the confiscated Bitcoin originated from 25 unhosted wallets owned by Chen Zhi in 2020, with the next significant movement recorded between June and July 2024.
Independent research by CryptoSlate offered a more neutral interpretation. The outlet explained that Arkham and Blockscope focused on transaction flows and technical patterns, while Elliptic and TRM concentrated on tracing the movement of funds. None of the sources identified a state actor behind the operation. CryptoSlate also observed that CVERC’s report drew heavily from open blockchain research on weak key algorithms and fee structures. Its accusations, the report argued, relied mainly on circumstantial timing and eventual custody instead of new forensic discoveries.
Experts in cybersecurity placed the case in a wider geopolitical frame. A regional analyst quoted by Benzinga described it as the first direct accusation by China against the United States over cryptocurrency theft, calling it a decisive escalation in the global contest for digital control. Meanwhile, market strategist Money Ape warned the dispute over $13 billion in Bitcoin could easily shake investor confidence and amplify volatility across global crypto markets.
Major Media and Geopolitical Expert Reactions
Bloomberg, as the first source to widely publicize China’s accusations, framed the story within broader US-China tensions. The Bloomberg article described it as “China’s latest effort to attribute major cyberattacks to the US” and emphasized that the December 2020 theft was “one of the largest crypto heists in history.” Global Times – a Chinese state newspaper under People’s Daily – amplified the CVERC report with strong language, calling it evidence of US “digital imperialism.”
CNN reported in detail on the Chen Zhi case from a law enforcement perspective on October 14, 2025, before China’s accusations emerged. Christopher Raia, FBI Deputy Director, described it as “one of the largest pig butchering schemes they’ve investigated.” CNN reported that Chen and others “are accused of running at least 10 forced labor camps across Cambodia since 2015,” and the $15 billion seizure “far exceeds the $225 million seizure the Justice Department announced in June.” However, CNN and other mainstream US media like Wall Street Journal, Financial Times, Reuters, Associated Press, and New York Times had no specific articles about China’s November 2025 accusations – possibly because the story is very recent or traditional papers are cautious about accusations from the Chinese government.
Professional crypto platforms like CoinDesk, CoinTelegraph, and The Block provided the most comprehensive coverage. The Block reported that the Chinese report called it “a typical case of ‘thieves robbing thieves’ orchestrated by a state-level hacking organization” and emphasized that “the silent and delayed movement” of stolen Bitcoin suggested government involvement rather than typical criminal behavior. Bitcoin Magazine noted that when Bitcoin reached its all-time high of $126,000 on October 6, 2025, the seized Bitcoin was worth over $16 billion, and the disputed Bitcoin represents about 0.65% of total Bitcoin supply.
Geopolitical analysis from experts emphasized the strategic importance of the incident. BeInCrypto reported: “Experts say crypto enforcement has evolved into a geopolitical tool. Bitcoin’s stateless nature allows nations to extend their influence through legal and technological systems.” The Financial Stability Board warned of “significant gaps in global crypto regulation” and noted that “without unified frameworks, countries are acting independently and often for strategic interests.” BeInCrypto quoted an expert: “Beijing’s frustration stems from long-standing fears about Western dominance in blockchain infrastructure and financial surveillance. China views US control over digital systems as a form of economic leverage.”
Invezz provided deep analysis of potential US strategy: “China’s report suggests the US may have used blockchain’s traceability to cover up a covert operation. By framing asset movement as lawful seizure, the US could theoretically use blockchain evidence both as proof of criminality and as cover for prior involvement.” Invezz also emphasized: “The broader implications of CVERC’s report extend far beyond the cryptocurrency industry. Accusing a foreign government of orchestrating a multi-year cyber heist introduces a new front in global cybersecurity disputes.”
US-China Relations Context and Similar Cases
The Chen Zhi/ LuBian affair marks the first direct confrontation between the United States and China over a cryptocurrency seizure. The event unfolds amid growing technological competition and a long record of major Bitcoin confiscations by US authorities.
Over the past decade, several large-scale operations have shaped America’s approach to digital assets. In 2013, the Silk Road case led to the confiscation of 144,000 BTC valued at $28.5 million. The “Individual X” seizure in 2020 added 69,370 BTC worth $960 million. The following year, the James Zhong case uncovered 50,676 BTC valued at $3.36 billion, and in 2022, the Bitfinex investigation recovered 94,643 BTC worth $3.6 billion. The Chen Zhi case, involving 127,271 BTC estimated at $15 billion, surpasses all previous records and stands as the largest seizure to date.
Earlier operations remained criminal in scope and avoided geopolitical entanglement. The Silk Road investigation targeted Ross Ulbricht, the platform’s creator, whose darknet marketplace enabled over $180 million in illegal transactions between 2011 and 2013. He was convicted on seven charges, sentenced to life in prison in 2015, and his Bitcoin holdings were later sold through auctions by the US Marshals Service.
In 2012, James Zhong, then 32, exploited a flaw in Silk Road’s withdrawal system and secretly held the stolen Bitcoin for nearly a decade. His identity came to light in 2020 when he attempted to cash out a portion through regulated exchanges. Investigators traced the transactions to his home in Georgia, where Bitcoin was found hidden inside circuit boards and even popcorn tins. He received a 20-year sentence in 2023.
The Bitfinex hack in 2016 revealed how cybercrime had evolved alongside the crypto market. Hackers Ilya Lichtenstein and Heather Morgan gained access to the exchange’s systems and manipulated internal protocols, increasing daily withdrawal limits from 2,500 to 1 million BTC. They stole 119,756 BTC, valued at $72 million at the time. Their arrest in 2022 followed a digital breakthrough: investigators accessed Lichtenstein’s cloud storage and discovered spreadsheets containing wallet keys. He was sentenced to five years, and Morgan served 18 months.
Each of these cases involved clear legal processes, arrests, and verifiable evidence. The Chen Zhi investigation breaks that pattern. The main suspect remains missing, and the Department of Justice has yet to reveal how it gained access to the Bitcoin wallets. This is the first instance where a cryptocurrency seizure has escalated into a diplomatic dispute between two superpowers.
The conflict adds another layer to the complex relationship between Washington and Beijing. Alongside Huawei, TikTok, and semiconductor dominance, Bitcoin has now become a point of contention in the broader struggle for technological influence. China’s stance on cryptocurrency has long been cautious and contradictory. It banned ICOs and exchanges in 2017, later extended the prohibition to all crypto transactions and mining in 2021, yet simultaneously elevated blockchain to a “national strategic priority.” The launch of the digital yuan (e-CNY) in April 2021, the world’s first central bank digital currency, highlighted Beijing’s ambition to lead in digital finance.
Despite strict controls, Chinese courts have continued to recognize cryptocurrency as a form of virtual property, allowing citizens to own it even while trading remains illegal. This contradiction reflects the country’s effort to balance technological advancement with financial control.
When Beijing banned mining in 2021, thousands of miners relocated abroad, reshaping the global landscape of Bitcoin production. Many moved to the United States and Kazakhstan, and by 2022, the US had become the leading hub for Bitcoin mining. The shift not only altered the distribution of computing power but also symbolized a deeper change in global digital influence.
The Chen Zhi affair has become more than a legal controversy. It is now a contest over digital sovereignty and control of value in the age of decentralized finance. As one analyst observed, the dispute reflects a larger truth: in the digital era, the power to command data and assets is inseparable from the power to lead the world economy.
Market Impact and Legal Implications
US regulators have the authority to seize assets connected to criminal activity even when no conviction has been reached. The practice remains contentious yet firmly rooted in American law. Blockchain transparency has made this process far more effective. Companies such as Chainalysis, Arkham Intelligence, and Elliptic provide sophisticated tools for tracing funds across mixers and exchanges. When combined with strict KYC procedures, these systems enable investigators to link anonymous wallets to verified identities. As US Attorney Damian Williams once stated, “We will follow the money relentlessly, no matter how well hidden, even to circuit boards at the bottom of popcorn tins.”
The Chen Zhi case illustrates how this legal framework collides with international politics. It involves a Cambodian-British entrepreneur running operations in Cambodia with mining links to both China and Iran. Beijing’s accusations blur the line between law enforcement and cyber conflict. The disputed Bitcoin was accessed through weaknesses in cryptographic key generation rather than through a direct hack, raising the unresolved question of whether the act represents a legitimate seizure or a digital incursion.
If American authorities used cyber intervention to gain control of the assets, the consequences could reach far beyond this investigation. Such a move would challenge established cybersecurity norms and test the boundaries of digital sovereignty. The Financial Stability Board has already warned that inconsistent regulation allows nations to pursue unilateral agendas, often prioritizing strategic advantage over cooperation. Without shared oversight, the global crypto market risks splintering into rival blocs, each promoting its own digital vision and turning decentralized finance into a new front in geopolitical competition.
Unresolved Questions and Future Prospects
Three unanswered questions continue to define the Chen Zhi controversy, and their resolution may determine how global powers assert control in the digital era.
The first question centers on access. How did American authorities manage to obtain the private keys to such an enormous Bitcoin holding? The Department of Justice has provided no explanation, and no official record describes how investigators gained entry to the wallets. This omission lies at the core of Beijing’s accusation. If Washington exploited cryptographic vulnerabilities to seize the funds, the act could extend beyond a lawful operation and into the realm of coordinated cyber intrusion.
The second question challenges the nature of the event itself. Was the theft genuine, or was it deliberately staged from within Prince Group? Analysts from Elliptic have proposed that the incident may have been an internal maneuver to disguise the origin of Chen Zhi’s assets. In that scenario, the so-called hack could have served as a laundering strategy, converting mining proceeds into Bitcoin perceived as legitimate. If this interpretation proves true, the story changes entirely. There would be no external attacker, only a criminal network losing control of its own creation.
The third question involves communication. Who reached out to US officials in the first place? There is no documentation explaining how the DOJ discovered these funds or whether the information came from within Chen’s circle. Details of cooperation between governments remain unconfirmed. Some investigators suspect that an insider may have approached American law enforcement, a possibility that could explain the three-month gap between the July 2024 wallet transfers and the October 2025 announcement.
The broader implications extend well beyond this dispute. In the near term, regulators across the United States and allied nations are expected to tighten oversight, strengthen KYC and AML frameworks, and increase compliance costs for crypto firms. Over time, several outcomes appear possible. The most likely scenario points to broader institutional participation supported by clearer legal standards. Another could see the rise of privacy-oriented assets as individuals seek greater anonymity. A third, less probable but still plausible, envisions a market downturn if governments mishandle large-scale asset management.
The rivalry between Washington and Beijing over digital finance shows no sign of easing. Two distinct philosophies are now taking shape. The United States favors a system where private cryptocurrencies operate within defined regulations, supported by government reserves and dollar-based stablecoins. China pursues the opposite course, advancing state-controlled digital currencies such as the e-CNY while discouraging private tokens. Dollar stablecoins like USDT and USDC continue to dominate global transactions, a situation that troubles Chinese policymakers who fear it limits the yuan’s global reach.
Digital asset sovereignty has now become a central issue in national strategy. Beijing’s long-standing vision of cyber sovereignty, emphasizing total control of its domestic digital infrastructure, increasingly conflicts with Washington’s growing influence in blockchain governance. If nations begin using cyber capabilities to capture or control digital wealth held by foreign citizens, the line between enforcement and cyber aggression will vanish. Such developments could provoke a global race for digital dominance, splintering the cryptocurrency ecosystem into rival jurisdictions and undermining international trust.
Even amid these tensions, signs of stabilization remain. The Strategic Bitcoin Reserve policy reflects a growing recognition of Bitcoin as a legitimate state-held asset. Institutional inflows into Bitcoin ETFs have remained steady, suggesting sustained confidence in its long-term value. Gradually, Bitcoin may evolve into a neutral global reserve, existing beyond national borders. El Salvador’s adoption of Bitcoin as legal tender in 2021 could one day be seen not as an anomaly, but as an early chapter in a broader shift toward official acceptance of digital assets as part of the global financial system.
Conclusion and Overall Assessment
China’s accusation against the United States for stealing 13 billion dollars in Bitcoin marks a defining shift in the global perception of cryptocurrency. Once viewed as a financial innovation, it has now evolved into a geopolitical instrument that shapes power, influence, and sovereignty in the digital age. The dispute over 127,272 Bitcoin, the largest amount ever linked to a government seizure, exposes deep tensions within the crypto world. It reveals the conflict between national jurisdictions, the lack of international legal clarity, and the growing use of digital assets as tools of strategic control.
The truth behind the 2020 incident remains unresolved. Some believe the United States may have executed or facilitated the original hack, while others view it as a lawful seizure of criminal proceeds. Each interpretation carries enormous weight for global law, cryptocurrency regulation, and the balance of power between Washington and Beijing. The blockchain provides full transparency, recording every transaction and wallet address, yet it cannot determine intent. Both governments rely on fragments of evidence. China points to long dormancy, advanced techniques, and the eventual custody of the Bitcoin as signs of a coordinated state operation, though no conclusive forensic proof exists. The United States offers specific charges and legal documents but has never explained how it gained access to the private keys, a silence that leaves the core question unresolved.
What is certain is the scale of change this case represents. Cryptocurrency has moved beyond finance, becoming a tool of statecraft and a symbol of national strategy. The outcome of this confrontation, whether resolved through diplomacy, international court decisions, or prolonged tension, will determine how nations shape their approach to digital sovereignty, cross-border enforcement, and control over decentralized assets in the years to come.
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