- A hacker stole about $20 million from a U.S. government wallet linked to assets from the 2016 Bitfinex hack and surprisingly returned $19 million.
- The attack raises security questions for US authorities as the wallet was previously inactive and has now come to attention due to suspicious transactions. There is speculation whether the return of the funds was due to fear of persecution.
- The hacking attack affected seized US government assets originally from the infamous Bitfinex hack of 2016.
Origin of the compromised wallet: The Bitfinex affair
A hacker attack on a US government-owned crypto wallet recently resulted in the theft of around $20 million in cryptocurrencies. Surprisingly, much of the stolen funds – about $19 million – was transferred back just a day after the attack, sparking speculation about the hacker’s motives.
The affected wallet contained assets that came from one of the largest hacks in cryptocurrency history: the 2016 Bitfinex hack. Over 119,000 Bitcoin, now worth billions, were stolen in that incident. US authorities confiscated these funds after the arrest of Ilya Lichtenstein and his wife Heather Morgan in 2022. The couple were convicted of money laundering, with Morgan being cooperative while Lichtenstein is expected to face a five-year prison sentence.
The attack: conspicuous transfers and return of funds
The US-controlled wallet, which had been inactive for around eight months, suddenly showed a series of unusual transactions on October 24th. One analyst noted that large sums of money Ethereum (ETH) and Stablecoins how USDC and aUSDC were transferred to a new address that had only been created recently. About 13.7 million aUSDC and another $446,000 in Ethereum were withdrawn from a DeFi platform where the government held the seized assets.
What is unusual is that the hacker paid back most of these funds within one day. The transactions raise questions as it is unclear whether the return was due to fear of traceability or whether the US government offered the hackers to keep some of the cryptocurrencies in exchange for impunity. Such circumstances, combined with the confusing management of seized assets, could lead U.S. authorities to revise their security protocols.
Arkham Intelligence’s investigation showed that the hacker may have used complex techniques to launder the funds, including transfers through smaller wallets often linked to criminal activity. The wallet remained relieved of $1.2 million after it was returned, which raised questions about internal security, especially among US authorities such as the Justice Department. The US Marshals, who are officially responsible for managing confiscated assets, have not yet commented on the incident.