US Gov’t Loses $20 Million As Crypto Wallets Fall Victim To Major Hack

A crypto wallet owned by the US government might have been compromised and infiltrated by hackers, raising concerns about the security measures being implemented by the government on digital assets.

The hacking incident could be a tell-tale sign of a lenient cybersecurity practice in handling government-controlled cryptocurrencies. It might indicate the need for the government to boost its firewalls and adaptability to digital technologies.

Tracking A Suspicious Activity

What appears to be a hacking incident was reported by Arkham Intelligence, which was able to track the movement of more than $20 million in crypto funds to another location.

According to the platform, they find it suspicious that a government wallet that has been inactive for at least eight months suddenly transfers funds to another crypto wallet.

The government-controlled wallet is the storage of the seized digital monies from the heist of the Bitfinex cryptocurrency exchange in 2016, which has been in US authorities’ custody since 2022.

Moving Crypto To Another Wallet

Arkham Intelligence said that the US government-owned crypto wallet initially withdrew $5.45 million in USDC from Aave, and the extraction of $1.12 million in USDT came a little later.

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

Shortly, about $20 million worth of cryptocurrency under government custody was transferred to another address. Reports said the new address was linked to DEX traders and a MetaMask swapper.

Some suggested that it is possible that the seized funds are being reorganized after being inactive for several months.

The US government has not confirmed nor denied its participation with the Aave lending vaults.

The Binance Connection

According to reports, after transferring the $20 million in crypto to a new address, it was tracked to be on the move again and finally landed in Binance.

Binance has been in the headlines lately as the company faces legal scrutiny for allegedly conducting illegal activities such as tax evasion.

Analysts said that the “fast movement of funds” led to speculation that the government-controlled wallet has been exploited by unknown attackers.

Historically, the US government has been a conservative seller in disposing of its digital assets. Authorities usually utilize Coinbase Custody hence, crypto transfer to DEX or Binance indicates that something is not right.

Meanwhile, Arkham Intelligence showed that Ethereum worth around $320,000 was moved to different exchanges. Aside from this, data revealed that smaller wallets received $80,000 crypto funds.

Laundering The Stolen Crypto

Arkham raised the possibility that the crypto hackers might have started trading the digital assets for Ethereum and might be laundering the funds utilizing several dubious addresses.

The US government has yet to release an official statement regarding this incident.

However, reports said that US investigators are already on the trail of the attackers and determining the extent of the hacking incident.

Featured image from Bulletproof, chart from TradingView