U.S. Government-Linked Cryptocurrency Wallet Attacked, Resulting in $20 Million Loss

• U.S. Government Crypto Wallet Breached, $20M in Seized Assets Stolen and Laundered.
• Attacker Converts and Launders Stolen Assets via “Binance Deposit” and Suspicious Addresses.
• $13.19M AUSDC Remains in Attacker’s Wallet; Funds Possibly Still at Risk of Laundering.

The U.S. government-linked cryptocurrency wallet was compromised, associated with assets seized in the Bitfinex hacker case. According to blockchain intelligence firm Arkham, a suspicious address attacked a U.S. government wallet transferring over $20 million in digital assets. Initially under federal control due to connections with the 2016 Bitfinex hack, these assets included substantial amounts of USDT, USDC, AUSDC, and ETH.

The breach led to the swift transfer of funds from the government-controlled wallet to the suspicious address. The attacker moved a combination of 177.892 ETH, worth approximately $446,920, along with $1.125 million in USDT, $5.445 million in USDC, $13.699 million in AUSDC, and an additional $1.125 million in AUSDT. 

Source: Arkham

Following the initial transfer, the attacker converted various assets into ETH, including USDT and USDC. Subsequently, these funds were dispersed across multiple addresses identified as “Binance Deposit” accounts. Arkham’s analysis indicates that the attacker may be actively laundering the stolen assets through additional suspicious addresses linked to known money laundering services.

The breached wallet reportedly contained funds seized from the Bitfinex hackers. Initially distributed across nine separate addresses, the U.S. government consolidated these assets into 0xc9E, with one address explicitly cited in court documents pertaining to the Bitfinex seizure case. 

This wallet consolidation likely aimed to improve security or efficiency in handling the recovered assets, yet it now appears to have been a target of a coordinated cyber attack.

Despite the transfers, the attacker’s wallet (0x348) still retains approximately $13.19 million in AUSDC. This significant balance highlights that only a portion of the stolen assets has been laundered thus far, with Arkham warning that the attacker may continue efforts to liquidate the remaining funds. 

The hacker’s activities, including converting stablecoins to ETH and strategic dispersals to multiple accounts, align with common tactics used in digital asset laundering.