US Government’s $20M in Crypto Funds Laundered After Attack

The latest entity to fall victim to a sophisticated crypto hack was the U.S. government, which recently lost nearly $20 million in crypto after hackers reportedly smurfed the funds, and now fresh developments suggest that the stolen funds are being laundered.

We had initially reported that hackers have stolen over $20 million in seized assets that were formerly associated with the Bitfinex exchange hack, where funds had been confiscated by the U.S. government in 2016. The cryptocurrencies were stolen from the wallet named  “U.S. Government: Bitfinex Hacker Seized Funds” and include USDT, USDC, and aUSDC.

As more details come to surface, it has been found that the stolen funds were moved to wallet 0x348 which has now begun selling the funds to ETH. We believe the attacker has already begun laundering the proceeds through suspicious addresses linked to a money laundering service.

~$20M IN US GOVERNMENT ASSETS MOVED TO NEW ADDRESS pic.twitter.com/MXgi9mderO

— Arkham (@ArkhamIntel) October 24, 2024

The stolen money was sent to multiple addresses and then converted into Ethereum and laundered via various exchanges, including an exchange that uses Binance’s liquidity, reported crypto sleuth ZachXBT.

Arkham Intellignece has also reported that the address is apparently linked to a 2016 crime case, where fugitives including  Ilya Lichtenstein, together with Heather Rhiannon Morgan were found guilty in conspire, stealing and money laundering crypto funds.

The hackers have effectively managed to conceal a significant portion of the stolen funds. However, one of the hacker’s wallets retains over $13 million in funds.  The rapid movement of the assets has raised alarm about the safety of the remaining funds. Investigations are taking place to find organizations that could be linked to this smurfing and to recover the seized cryptocurrencies. 

Recent Attacks: 

In the first half of 2024, hackers stole $1.3 billion in crypto, double the amount stolen during the first six months just a year ago.  However, this is not all; most hackers focused on taking advantage of the weakness in private keys, seed phrases, smart contracts, and flash loans, with centralized exchanges being the major target. A significant incident involved DMM, which lost around $305,000,000, which is 19% of the total stolen in 2024. The recent theft of assets seized by the U.S. government highlights the persistent vulnerabilities that still exist in the crypto ecosystem; it also emphasizes the burning need for strong security and a digital asset storage solution focusing on security.

Also Read: WazirX Reportedly Moved $72.13 Million in Crypto to Bybit Post-Hack