Highlights:
- On Thursday, Arkham Intelligence reported a breach of a U.S. government’s crypto wallet.
- The breach resulted in a loss of $20 million worth of assets from the wallet.
- The compromised funds were originally seized from hackers tied to the 2016 Bitfinex hack.
The blockchain intelligence firm Arkham Intelligence posted on X that a crypto wallet linked to the United States government had been breached, resulting in a loss of $20 million worth of assets. Unusual on-chain activity began around 2:00 p.m. ET Thursday, when a U.S. government-linked address, dormant for eight months, made suspicious transfers.
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𝗨𝗣𝗗𝗔𝗧𝗘: 𝗨𝗦 𝗚𝗼𝘃𝗲𝗿𝗻𝗺𝗲𝗻𝘁 𝗹𝗶𝗻𝗸𝗲𝗱 𝗮𝗱𝗱𝗿𝗲𝘀𝘀 𝗮𝗽𝗽𝗲𝗮𝗿𝘀 𝘁𝗼 𝗵𝗮𝘃𝗲 𝗯𝗲𝗲𝗻 𝗰𝗼𝗺𝗽𝗿𝗼𝗺𝗶𝘀𝗲𝗱 𝗳𝗼𝗿 $𝟮𝟬𝗠.
$20M in USDC, USDT, aUSDC and ETH has been suspiciously moved from a USG-linked address 0xc9E6E51C7dA9FF1198fdC5b3369EfeDA9b19C34c to… pic.twitter.com/UXn1atE1Wx
— Arkham (@ArkhamIntel) October 24, 2024
These suspicious transfers raised concerns among blockchain analysts like ZachXBT, who labeled them “nefarious” and suggested potential theft.
Overview of Stolen Assets
The compromised $20 million in the address was originally seized from hackers tied to the 2016 Bitfinex hack. According to data tracked by Arkham, an initial transfer of $1.25 million in USDT and $5.5 million in USDC was made from the DeFi platform Aave. Following this, approximately $13.7 million in aUSDC and $446,000 in Ethereum were moved to a newly created wallet.
Further movements involved around $320,000 in Ethereum sent to various exchanges. Additionally, $80,000 was distributed to smaller wallets. Investigations are ongoing to trace the laundered funds and determine the full extent of the breach. The US government has not yet issued an official statement on the incident.
Arkham noted that the attacker started selling these assets for ETH and may be laundering the proceeds through multiple suspicious addresses. At the time of the report, US authorities still held a total of over $14 billion in various cryptocurrencies.
The suspect has not yet been identified, and it remains unclear how the wallet was compromised. However, the suspicious behavior of the account suggests a malicious operation. The wallet that received these funds was created just days before the transfer.
Arkham stated:
“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.”
The Bitfinex Hack: Lichtenstein and Morgan’s Criminal Saga
In 2016, Ilya Lichtenstein and his rapper partner Heather Morgan, known as Razzlekhan hacked Bitfinex. The stole 120,000 Bitcoin worth around $8.2 billiona and were arrested by US authorities in 2022.
Law enforcement seized the stolen assets, marking the largest digital asset seizure by the Department of Justice at that time. In July 2023, the couple pleaded guilty to money laundering and conspiracy to defraud the US government for lighter sentencing. Initially, Lichtenstein admitted to laundering the funds but later claimed he was also the hacker.
In an Oct. 9 filing, US prosecutors recommended an 18-month prison sentence for Morgan due to her cooperation with law enforcement. She was considered a “lower level” participant and did not spend much of the stolen funds. Prosecutors recommended a five-year sentence for Lichtenstein for orchestrating the hack and stealing 120,000 BTC, which is significantly lower than the initial 20-year sentence they sought.
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