A cryptocurrency wallet owned by the US government may have been breached and penetrated by hackers, raising concerns about the security measures the government has in place for its digital assets.
This hacking incident may be a clear sign of lenient cybersecurity practices when dealing with government-controlled cryptocurrencies. This may indicate that governments need to strengthen their firewalls and adaptability to digital technologies.
Tracking suspicious activity
The apparent hacking incident was reported by Arkham Intelligence, which was able to track the movement of over $20 million in crypto assets to different locations.
The platform said it was suspicious that a government wallet that had been inactive for at least eight months would suddenly transfer funds to another crypto wallet.
The government-controlled wallet is the repository for digital money seized in the 2016 robbery of cryptocurrency exchange Bitfinex, and has been under U.S. authorities' control since 2022.
Move cryptocurrencies to another wallet
According to Arkham Intelligence, the U.S. government-owned cryptocurrency wallet initially withdrew $5.45 million in USDC from Aave, with $1.12 million in USDT only being extracted after a short delay.
𝗨𝗣𝗗𝗔𝗧𝗘: 𝗨𝗦𝗚𝗼𝘃𝗲𝗿𝗻𝗺𝗲𝗻𝘁𝗚𝗼𝘃𝗲𝗿𝗻𝗺𝗲𝗻𝘁𝗹𝗶 𝗻𝗸𝗲𝗱𝗮𝗱𝗱𝗿𝗲𝘀𝘀𝘁𝗼𝗯𝗲𝗲𝗻𝗳𝗼𝗿$ $𝟮𝟬𝗠.
$20 million in USDC, USDT, USDC, and ETH were suspiciously moved from address 0xc9E6E51C7dA9FF1198fdC5b3369EfeDA9b19C34c linked to USG… pic.twitter.com/UXn1atE1Wx
— Arkham (@ArkhamIntel) October 24, 2024
A short time later, approximately $20 million worth of virtual currency in government custody was transferred to another address. According to reports, the new addresses are linked to DEX traders and Metamask swappers.
Some believe the seized funds may have been reorganized after months of inactivity.
The US government has neither confirmed nor denied its participation in the Aave lending vault.
BTCUSD trading at $67,403 on the daily chart: TradingView.com
Connection with Binance
After transferring $20 million in crypto to a new address, it was tracked on the move again and eventually ended up on Binance, according to reports.
Binance has been in the headlines recently as it faces legal investigation for allegedly engaging in tax evasion and other illegal activities.
Image: CuriouSTEM
Analysts said the “rapid movement of funds” led to speculation that the government-controlled wallet had been misused by unknown attackers.
Historically, the U.S. government has been a conservative seller when it comes to disposing of digital assets. Transferring cryptocurrencies to a DEX or Binance is an indication that something is not right, as authorities typically utilize Coinbase Custody.
Meanwhile, Arkham Intelligence revealed that approximately $320,000 worth of Ethereum was moved to another exchange. Separately, data revealed that a small wallet received $80,000 in crypto funds.
Laundering of stolen cryptocurrencies
Arkham noted that crypto hackers have started exchanging digital assets for Ethereum and may be using some suspicious addresses to launder money.
The US government has not yet issued an official statement regarding the incident.
However, according to reports, US law enforcement authorities are already tracking down the attackers and determining the scope of the hacking incident.
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