- Hackers reportedly stole $20 million from a U.S. government-linked crypto wallet of seized funds.
- Complex laundering tactics involve nested exchanges using Binance liquidity for fund transfers.
The surge in crypto adoption has unfortunately been matched by a rise in scams and cyberattacks, highlighting the vulnerabilities within the digital asset space.
U.S. government linked crypto wallet under threat
In a recent incident, hackers reportedly infiltrated a U.S. government-linked crypto wallet that held seized Bitfinex funds.
They stole approximately $20 million in various assets, including Tether [USDT], USD Coin [USDC], and Ethereum [ETH], according to blockchain intelligence firm Arkham.
The firm further noted that someone quickly converted the stolen stablecoins to ETH and routed them through multiple addresses marked as “Binance Deposit.”
“The funds were moved to wallet 0x348 which has begun selling the funds to ETH. We believe the attacker has already begun laundering the proceeds through suspicious addresses linked to a money laundering service.”
Unexpectedly, the crypto community responded with a wave of humor upon hearing the news.
Source: X
Arkham also pointed out that shortly before the hack, the U.S. government withdrew $5.4 million from Aave. It added,
“This is their first activity on this address in 8 months.”
The Bitfinex hack- Explained
In 2016, Ilya Lichtenstein and Heather Morgan orchestrated a high-profile hack on the Bitfinex exchange. The hack seized 120,000 Bitcoin [BTC], now valued at approximately $8.2 billion.
U.S. authorities arrested them in 2022, leading to the seizure of these stolen assets. This marked the Department of Justice’s largest-ever digital asset recovery.
After they struck a plea deal in July 2023, both admitted to charges of money laundering and conspiracy against the U.S. government. Now they are facing reduced sentences.
Prosecutors have sought an 18-month prison term for Morgan. Primarily due to her lesser role in the scheme and cooperation with law enforcement.
Whereas, Lichtenstein, who initially faced 20 years, is expected to receive a five-year sentence for collaborating with investigators and lacking prior criminal offenses.
ZachXBT steps in
Pseudonymous blockchain investigator ZachXBT responded to Arkham’s report, describing the hack as “nefarious” and labeling it a clear case of theft.
He observed that the hackers moved Ethereum in $40,000 increments to what appeared to be a deposit address linked to Binance.
However, he later clarified that these transactions were routed through a “nested exchange.” He did this by leveraging Binance’s liquidity, rather than directly involving the Binance platform itself.
“It’s not Binance it’s a nested exchange which uses Binance for liquidity.”
This nuanced approach shows how complex laundering schemes can obstruct the exact path of stolen funds in the crypto space.