This accusation revolves around the 2020 hack of the LuBian mining pool, which experienced a loss of 127,426 BTC—then worth approximately $3.5 billion—from its hot wallet. Beijing’s cybersecurity agency, CVERC, claims this event was not a mere cybercrime but a “state-level operation” executed by U.S. intelligence. In contrast, Washington asserts that the Bitcoin in question was legally seized as part of an anti-fraud initiative linked to Cambodia’s Huione Group.
The substantial Bitcoin reserve, now valued at $13.3 billion, was reportedly confiscated under a U.S. Department of Justice directive in late 2025, escalating one of the most serious disputes in the cryptocurrency realm. Analysts believe this incident could negatively impact short-term market sentiment, causing profit-taking amidst fears and uncertainties. Nevertheless, this geopolitical clash may also reinforce Bitcoin’s position as a significant digital asset for the future.
Currently, Bitcoin (BTC) is trading around $104,374, having dropped 1.8% in the last 24 hours, with an intraday high of $107,355 and a low of $104,251, indicating moderate volatility. Its market capitalization remains approximately $2.08 trillion with strong trade volumes in the billions, as investors closely monitor the $104K support level.
Market observers highlight that about 0.65% of the total Bitcoin supply is entangled in this conflict, suggesting that reduced liquidity could tighten supply and potentially elevate long-term valuations. Despite the current tensions, institutional demand remains robust, as top Bitcoin ETFs continue to see inflows. This geopolitical tug-of-war has transformed Bitcoin beyond a mere cryptocurrency into a significant political asset influencing future price movements.
Overview of the Incident
China’s accusation against the U.S. has sparked a new crypto controversy. The claim of theft concerns 127,000 Bitcoin (BTC), valued over $13 billion, which Beijing describes as a “state-level cyber theft.” This stash is connected to the 2020 LuBian mining pool hack, wherein thousands of coins were taken from Chinese servers.
China’s National Computer Virus Emergency Response Centre (CVERC) issued a report asserting that the U.S. government orchestrated the breach and later seized the stolen Bitcoin. The U.S. Department of Justice counters that the coins were confiscated as part of a fraud crackdown involving the Huione Group of Cambodia.
This dispute has evolved into a geopolitical matter, injecting fresh uncertainty into the global cryptocurrency market and raising inquiries about state involvement in digital asset management.
Background on the LuBian Hack
The controversy traces back to December 2020 when the LuBian mining pool, a significant player in China’s Bitcoin scene, suffered a major breach. Approximately 127,426 BTC—worth about $3.5 billion at that time—disappeared from its hot wallet.
Blockchain analysts suggested that the attack might not have been a straightforward hack but perhaps a “weak-key vulnerability” or insider collusion, referred to as the “Milky Sad” flaw. This vulnerability stemmed from insufficient randomness in private key generation, leaving the funds at risk.
In late 2025, U.S. authorities disclosed the seizure of those same Bitcoin—now valued at around $13.3 billion—during a global fraud investigation, prompting immediate backlash from Beijing.
Impact on Global Markets
The diplomatic strife between China and the U.S. has disturbed cryptocurrency investors. Beijing’s strong accusation—branding the U.S. a “state-level hacking organization”—has intensified what began as a legal dispute into a geopolitical confrontation.
While the U.S. government has not provided further commentary beyond confirming the lawful nature of the seizure, global regulators are closely monitoring developments. The Bitcoin involved represents approximately 0.65% of the total circulating supply.
In the week that followed, BTC experienced nearly a 4% decline, with a 5.5% drop over the month. However, Bitcoin’s market cap remains above $2 trillion, emphasizing its continued significance. Strong trading activity shows that investor participation is steady, even amidst short-term caution.
This supply tension may influence market liquidity and Bitcoin price predictions in both negative and positive directions—potentially leading to short-term volatility and altering long-term investor confidence.
Future Price Predictions
Currently trading around $105,026 with a 0.72% increase over the past 24 hours and a market cap of $2.09 trillion, Bitcoin is maintaining support near key technical levels. Analysts caution that the fear, uncertainty, and doubt (FUD) stemming from the China-U.S. conflict could lead to temporary market outflows.
Yet, some experts argue that this geopolitical climate may actually enhance Bitcoin’s “digital gold” narrative, as governments increasingly recognize it as a strategic asset.
If the seized Bitcoin remains out of circulation, it could tighten supply—a potential bullish factor as we approach 2026. Data from Coinglass indicates steady accumulation patterns among Bitcoin ETFs and institutional investors, demonstrating underlying demand.
Source: Economictimes Edited by Bernie
