Crypto Cold War: China Says U.S. Seized $13B in Bitcoin from LuBian Mining Pool
China Accuses U.S. of Illegally Seizing 127,000 BTC in Growing Crypto Power Clash
A new diplomatic storm is brewing between China and the United States — and this time, it’s over Bitcoin.
Beijing has formally accused Washington of illegally seizing 127,000 BTC, worth more than $13.3 billion, alleging that the coins were stolen from a Chinese mining pool through a covert cyber operation orchestrated by U.S. intelligence agencies.
The claim, first released through China’s National Computer Virus Emergency Response Center (CVERC), marks one of the most serious public confrontations between the two powers in the field of digital assets and cybersecurity. It adds a new layer of complexity to an already tense relationship, where technology, finance, and geopolitics increasingly collide.
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| Source: Wise Advice |
The 2020 LuBian Hack and the Missing Bitcoin
The controversy traces back to December 2020, when the LuBian Mining Pool, one of China’s prominent Bitcoin mining collectives at the time, reported an unexplained disappearance of 127,426 BTC from its hot wallet — an amount then worth about $3.5 billion.
For years, the identity of the hacker remained a mystery. Cybersecurity researchers proposed several theories. Some suggested that the incident resulted from a “weak-key vulnerability,” a rare cryptographic flaw that can make wallet private keys more predictable and easier to breach. Others suspected an insider had compromised the system and rerouted the coins.
The Bitcoin vanished into the blockchain’s depths, untraceable to any known identity. The case eventually went cold — until now.
U.S. Seizure Sparks Diplomatic Outrage
In October 2025, the U.S. Department of Justice (DOJ) issued a public statement announcing it had seized 127,271 BTC in connection with an investigation into an alleged Cambodia-based criminal network called Huione.
The DOJ described the seizure as “the largest Bitcoin recovery in U.S. law enforcement history.”
According to the U.S., the digital assets were proceeds from a series of online scams, money laundering operations, and ransomware activities traced through blockchain analytics.
But China’s cybersecurity agency says otherwise.
In an explosive statement, CVERC accused the U.S. of being the original hacker, alleging that the 2020 LuBian theft was in fact part of a state-sponsored cyber campaign led by U.S. intelligence.
“The United States has long engaged in large-scale surveillance and cyberattacks on global infrastructure,” CVERC declared.
“The so-called seizure is merely an attempt to legitimize stolen property through judicial disguise.”
Beijing’s accusation implies that the United States not only hacked a Chinese crypto infrastructure but later laundered the stolen coins through its own legal system, presenting the operation as a crackdown on criminal activity.
The U.S. government has not issued a detailed response to the claims. Officials from the DOJ reiterated that the seizure was “lawful” and conducted under international anti-fraud agreements.
U.S. Becomes the Largest State Bitcoin Holder
Regardless of the dispute, one fact is undeniable — the U.S. government now holds one of the largest Bitcoin reserves in the world.
Following the 2025 seizures, Washington reportedly controls over 325,000 BTC, currently valued at around $36 billion at market rates.
American officials argue that these holdings are part of the country’s anti-crime operations and will eventually be auctioned off or liquidated under federal asset management programs.
However, critics point out that these large state-owned Bitcoin wallets grant Washington unprecedented influence over the crypto market, a situation that Beijing calls “financial weaponization through digital assets.”
Bitcoin Price Reacts to Geopolitical Tension
The announcement has rattled global markets.
Bitcoin (BTC) is currently trading near $105,000, slipping about 0.7% in 24 hours as investors digest the growing U.S.–China tension.
Traders fear that this dispute could evolve into a new regulatory battleground, with both nations pushing to tighten oversight of crypto flows across borders.
Meanwhile, U.S.-listed Bitcoin and Ethereum ETFs recorded $755 million in weekly outflows, signaling reduced investor appetite amid rising uncertainty.
Despite short-term jitters, some analysts believe the long-term outlook could turn bullish.
If more national governments accumulate or seize Bitcoin reserves, the circulating supply could shrink, strengthening its reputation as “digital gold” and potentially driving prices higher over time.
Cybersecurity and State-Sponsored Hacking Allegations
The latest accusations reopen long-standing suspicions of cyberwarfare between the world’s two largest economies.
Over the past decade, both countries have accused each other of cyber espionage, corporate hacking, and surveillance campaigns.
But the involvement of cryptocurrency — a decentralized and borderless financial tool — introduces a volatile new dimension.
CVERC’s report claims that American agencies, including the NSA, FBI, and undisclosed military cyber units, may have exploited weaknesses in Chinese mining infrastructure to gain access to wallet keys and reroute the funds.
If proven true — a claim Washington vehemently denies — the case could redefine how governments approach digital sovereignty and cross-border crypto assets.
Political Fallout and Global Implications
Experts say the case goes far beyond a simple crypto dispute.
“This isn’t about Bitcoin anymore,” said Dr. Michael Hurst, a cybersecurity researcher at the University of London.
“It’s about control of the next global financial system. Whoever controls or secures blockchain infrastructure will hold the keys to economic influence.”
The timing also raises eyebrows. As the U.S. expands its global sanctions on blockchain mixers, privacy coins, and offshore crypto entities, Beijing has simultaneously accelerated the rollout of its Digital Yuan, positioning itself as a counterbalance to U.S.-led financial dominance.
The Allied Crypto Council, a London-based policy group, warned that the confrontation could lead to fragmented crypto regulations, where digital assets are governed along geopolitical lines — an echo of the Cold War, but in cyberspace.
The Bigger Picture: Bitcoin as a Political Weapon
For over a decade, Bitcoin has been hailed as a tool for decentralization — money without borders, governments, or central banks.
But the current controversy reveals a paradox: as its value and influence grow, Bitcoin is becoming a symbol of state power and national rivalry.
The fact that two global superpowers are now publicly disputing ownership of more than $13 billion worth of BTC underscores how digital wealth is becoming a geopolitical asset.
In the words of crypto analyst Lydia Chen,
“Bitcoin has evolved from a niche asset to a strategic resource. This dispute shows that whoever holds more of it, legally or otherwise, gains leverage in the digital economy.”
What Happens Next
International law experts suggest that resolving the case will be extremely complicated.
Without a global framework governing digital asset ownership, the question of rightful possession remains ambiguous.
China could escalate the matter through diplomatic protests at the United Nations or World Trade Organization, while the U.S. is expected to maintain its position of lawful seizure under existing anti-money-laundering treaties.
In the meantime, both governments are strengthening domestic controls — China through its Digital Currency Electronic Payment (DCEP) system, and the U.S. through expanding its Treasury crypto task forces.
For investors and traders, the event is a reminder that the battle for Bitcoin is no longer just economic — it’s geopolitical.
Conclusion
The accusations surrounding the 127,000 BTC seizure mark a historic moment in the evolution of cryptocurrency diplomacy.
What began as a mysterious hack in 2020 has morphed into a multi-billion-dollar standoff between the world’s largest economies, exposing the fragile intersection between technology, national security, and financial power.
Whether this confrontation leads to stricter international crypto laws or triggers a digital Cold War remains to be seen.
But one thing is certain: Bitcoin has entered the global stage as more than just an asset — it is now a tool of political leverage and power.
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