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25th October 2024 – (Washington) A crypto wallet address associated with the U.S. government, which held seized funds from Bitfinex, fell victim to a reported hack, resulting in the theft of $20 million.
According to blockchain intelligence firm Arkham, the hackers executed a sophisticated operation, siphoning $20 million worth of Tether (USDT), USD Coin (USDC), aUSDC, and Ethereum (ETH) from the compromised wallet.
The stolen stablecoins were swiftly converted into Ethereum and funnelled into multiple addresses labelled “Binance Deposit.” Arkham’s analysis suggests that the hackers have initiated the process of laundering the illicit proceeds through addresses linked to suspicious money laundering services.
In a concerning turn of events, Arkham also noted that moments before the unauthorized transfers took place, the US government withdrew $5.4 million from Aave, marking its first activity on the address in eight months.
Furthermore, an additional $1.12 million in Tether (USDT) was withdrawn from Aave by the government, raising further questions about the intricacies of the breach.
Blockchain investigator ZachXBT weighed in on the situation, describing the hack as “nefarious” and attributing the funds’ movement to outright theft.
The saga harks back to the infamous 2016 heist where a hacker duo made off with 120,000 Bitcoin (BTC), presently valued at around $8.2 billion. The culprits, Ilya Lichtenstein and Heather Morgan, are slated for sentencing this November.
US law enforcement agencies intervened post the theft, securing the pilfered crypto assets in what was deemed a significant seizure by the United States Department of Justice at the time.
As investigations unfolded, it was revealed that the hacker wallet that received substantial sums from government-associated funds utilised 1inch, an exchange aggregator, to convert stablecoins into Ethereum. Subsequently, the perpetrators fragmented the Ethereum into $40,000 increments and transferred them to a deposit address for a crypto exchange, initially thought to be Binance, but later clarified by ZachXBT as a “nested exchange utilising Binance for liquidity.”
