The LuBian affair: What if the US was behind the biggest Bitcoin hack?

Beijing accuses the United States of seizing funds from the massive hack

This was reported by China’s National Computer Virus Emergency Response Center (CVERC), a government agency “United States Intelligence Organizations” They are believed to be responsible for a large-scale hack targeting LuBian, a Chinese Bitcoin mining company.

According to their technical report, the hack allowed the exfiltration of 127,272 bitcoins, an astronomical amount transferred to wallets now identified as being associated with US entities. The report states that “The United States Department of Justice is currently holding these bitcoins”which, if proven, places this affair between cybercrime and geopolitical issues.

The facts at the heart of this allegation are as follows:

• Compromised volume: 127,272 BTC transferred from addresses associated with LuBian, so currently around $15 billion;

• Technical origin: the hack occurred in December 2020, according to several consistent reports;

• Public disclosure: the affair was brought to light last August thanks to research by Arkham Intelligence;

• Official Allegation: China says so “U.S. Intelligence Organizations” conducted a hacking operation;

• Beijing views the seizure as confiscation of private property and questions the legitimacy of the legal framework invoked by Washington.

This accumulation of facts gives the affair an unprecedented scope in the cryptocurrency field, not only in terms of quantity, but also in the diplomatic dimension it could entail.

Exploitation of a cryptographic flaw and five years of silence

In addition to the political allegations, a technical investigation reveals that the hack is caused by a critical flaw in LuBian’s internal security. The platform would generate private keys with too little entropy, limiting security to just 32 bits, a serious flaw in the encryption world.

This vulnerability would allow a malicious actor to gain access to LuBian wallets without leaving an immediate trace. Once the funds were moved, they would lie dormant, spread across multiple addresses, for almost five years. It was precisely this prolonged inactivity that raised the suspicions of Arkham Intelligence.

The chronology is interesting. How could such a volume of bitcoins, which at the time represented 6% of the global hashrate of the bitcoin network, disappear without the authorities or markets noticing? And why were these assets suddenly linked to seizure by the US Department of Justice in 2023, without prior official communication? The available documents do not address these issues, but highlight the ongoing lack of transparency on the part of both mining specialists and judicial authorities.

If CVERC’s statements are to be confirmed, the affair could reignite diplomatic tensions but also redefine transparency protocols surrounding cryptocurrency seizures. Confidence in Bitcoin’s traceability, often described as absolute, is challenged here by a series of discreet actions, technical flaws and long silences. From a simple hack, the LuBian affair turns into a life-size test of global cryptocurrency regulation.

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The comments and opinions expressed in this article are solely those of the author and should not be considered investment advice. Before making any investment decision, do your own research.