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US Government Wallet Drained Of $20 Million In Seized Assets In Suspected Hack

Don’t invest unless prepared to lose all the money you invest. This is a high-risk investment, you shouldn’t expect to be protected if something goes wrong.

Over $20 million worth of seized stablecoins and Ethereum was transferred out of a wallet linked to the US government in what is being considered a theft.
Over $20 million worth of seized stablecoins and Ethereum was transferred out of a wallet linked to the US government in what is being considered a theft.

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Over $20 million worth of seized stablecoins and Ethereum was transferred out of a wallet linked to the US government in what is being considered a theft.

On-chain analytics firm Arkham Intelligence revealed that the attacker sent funds tied to the 2016 Bitfinex hack to a five-day-old wallet address.

“$20M in USDC, USDT, aUSDC and ETH has been suspiciously moved from a USG-linked address,” it said in an Oct. 24 post on X. 

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Hacker Starts Laundering The Government’s Funds Through Various Platforms

Shortly after the transfer out of the government’s wallet, the hacker started converting the stablecoins into ETH through addresses likely associated with a money-laundering service, according to Arkham Intelligence.

On-chain sleuth ZachXBT said that some of the funds have also been moved to instant exchanges. One of these platforms sources its liquidity from Binance, the leading centralized crypto exchange.

US Government Seized The Assets From A 2016 Bitfinex Hack

The funds involved in these transfers were seized by the US government in the 2016 Bitfinex hack. Ilya Lichtenstein and Heather Morgan, the perpetrators of the hack, face sentencing next month.

During the 2016 hack, Lichtenstein stole 120,000 Bitcoin. A few years later in 2016, the couple was arrested by US authorities. Law enforcement then seized the stolen assets, which consisted of USD Coin (USDC), Tether (USDT), aUSDC and Ethereum (ETH).

The couple pleaded guilty to charges of money laundering and conspiracy to defraud the US government in 2023. This was part of a plea deal with prosecutors for a lighter sentence.

In an Oct. 9 filing, prosecutors argued that Morgan’s cooperation with law enforcement justified a lighter sentence of 18 months in prison. She was also deemed a “lower level” participant in the Bitfinex hack and did not spend a substantial amount of the stolen funds either.

Prosecutors used the same rationale to recommend a 5-year sentence for Lichtenstein for orchestrating the hack. His cooperation with investigators and lack of a criminal history were also mentioned as reasons in favor of a reduced sentence. Prosecutors had initially sought a 20-year sentence.

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