US Government Crypto Assets Compromised, $20 Million Lost to Hackers

Arkham Intelligence noted significant activity in government-linked wallets, prompting theories that hackers would gain access to addresses linked to funds previously seized in high-profile cases such as the 2016 Bitfinex hack.

Data from the chain shows that addresses linked to government seizures, including one tagged ‘0xc9E’, received assets from wallets linked to this hack. After moving assets from these addresses, Arkham noticed that wallet “0x348” began selling portions of the stolen funds and converting them into Ethereum.

The breach has raised questions about the security protocols for these seized assets. Transactions linked to wallets previously linked to Bitfinex hackers Ilya Lichtenstein and Heather Morgan included transfers from Tether, USDC and Ethereum and withdrawals from decentralized finance (DeFi) platforms such as Aave.

Arkham has shared details from court documents related to the Bitfinex hack case, which names multiple DeFi platforms, including Yearn Finance and Curve Finance, as sources for some of the seized funds.

According to Arkham’s analysis, a significant amount – more than USDT 3.6 million – was housed in Yearn Finance’s liquidity pools at addresses now linked to the government. Yet the money appeared to have been moved to wallet ‘0x348’, which allegedly routed it to external addresses linked to money laundering services.