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- China accused the U.S. of seizing 127,000 Bitcoin from the 2020 LuBian hack, calling it a state-backed cyber theft

- The U.S. Department of Justice insists the seizure followed legal procedures tied to criminal activity

Beijing has accused Washington of carrying out what it calls a "state-level cyber theft," claiming the United States unlawfully seized 127,000 Bitcoin (CRYPTO: $BTC ) from a 2020 attack on the LuBian mining pool. The disputed funds, now worth more than $13 billion, have escalated tensions between the world's two largest economies.

According to China's National Computer Virus Emergency Response Center (CVERC), the stolen Bitcoin was not taken by outside hackers but through a coordinated operation by U.S. intelligence agencies. The watchdog alleges that Washington's seizure of the coins, originally worth about $3.5 billion, was disguised as a legal confiscation.

The U.S. Department of Justice (DOJ) has denied wrongdoing, stating that the action complied with established legal frameworks. Officials insist the seized assets stemmed from criminal activity linked to Chen Zhi, founder of the LuBian mining pool, who was indicted in October 2025. It is worth noting that at Bitcoin's peak of over $126,000 on October 6, 2025, the confiscated holdings would have been valued at more than $16 billion.

Timeline of the 2020 Hack and DOJ Action

The LuBian breach occurred on December 29, 2020, when hackers drained 127,272 BTC from the pool's hot wallet in under two hours. Blockchain data showed identical transaction fees, suggesting an automated process.

For nearly four years, the funds remained untouched. LuBian's operators repeatedly published more than 1,500 messages on-chain, pleading for the assets' return. However, the addresses stayed silent until mid-2024, when Bitcoin suddenly moved.

According to Arkham Intelligence, the new wallets receiving the funds were likely under the control of the U.S. government. Within months, the DOJ announced that it had confiscated the assets and charged Chen Zhi, alleging he had ties to the 2020 theft.

CVERC's investigation disputes that claim, suggesting only part of the seized Bitcoin was illegally obtained. The agency estimates roughly 17,800 BTC were mined legitimately, another 2,300 BTC originated from mining pool rewards, and the remainder from exchange transactions. The report accuses Washington of labelling all holdings as illicit to justify its appropriation.

Tensions have already been heightened by trade disputes and competition in artificial intelligence. Nvidia (NASDAQ: $NVDA ) CEO Jensen Huang recently predicted that China could outpace the U.S. in AI development, a claim that underscored the fragile balance between cooperation and confrontation.

If confirmed, the LuBian episode could reshape international dialogue on asset recovery, cyber sovereignty, and the role of governments in policing digital finance.