US Government wallet reportedly targeted in $20 million crypto exploit

An estimated $20 million in cryptocurrency has been stolen from wallets belonging to the U.S. government, according to blockchain analytics firm Arkham Intelligence. On-chain movements started on Thursday when funds that had not been moved for more than eight months were withdrawn from the decentralized lending platform Aave. 

Arkham Intelligence identified the stolen funds to an address, 0xc9E, that received assets from the 2016 Bitfinex Hack from nine U.S government seized wallet addresses. Among the wallets hacked is the address: 0xE2F699AB099e97Db1CF0b13993c31C7ee42FB2ac, which was involved in the previous court cases linked to the Bitfinex cryptocurrency theft.

The stolen tokens include AUSDC stablecoin, worth $13.7 million; USDC stablecoin, worth $5.4 million; USDT stablecoin, worth $1.1 million; and ETH, worth $500,000. The suspect’s motives for the transfer remain unknown, but given the pattern of the transfers, this was not an internal transfer of funds but a malicious operation.

Laundering attempts underway

After the theft, the thief began to transfer the stolen funds to various non-custodial wallets. These are the platforms that do not compel users to maintain their funds with another party making it simpler for wrongdoers to escape. According to Arkham Intelligence, the hacker is likely to be laundering the proceeds through addresses associated with other known money laundering services.

ZachXBT, a popular crypto analyst, supported Arkham Intelligence’s conclusions, stating that the US government would not use services such as Switchain or N.Exchange for official transactions. 

The funds in question are tied to the highest-profile hack of 2016 in which Bitfinex, a cryptocurrency exchange, was hacked. Ilya Lichtenstein and Heather Morgan, the couple behind the laundering of the stolen funds, were arrested by the U.S. authorities and entered a guilty plea to money laundering charges on August 2023. At the time of their arrest, the DOJ seized $3.6 billion in cryptocurrency.

At the time of this writing, the wallet has only $127 left in it, and it is in a meme coin associated with the former president of the United States, Donald Trump. Should this be substantiated, this would be the latest incident in the ever-complicated Bitfinex story. The U.S. Marshals Service, which is responsible for managing seized property, would be forced to explain how much of the cryptocurrency could be lost.

Cryptocurrency hacks have been on the rise, and they are said to have increased by 900% in the first half of 2024 compared to the same period in the previous year. In the second quarter of the year, the losses stood at nearly $1.4 billion. However, even with such an increasing rate, the Bitfinex hack is still one of the biggest hacks in the history of cryptocurrency thefts.