- A U.S. government crypto wallet tied to the 2016 Bitfinex exchange hack was drained of over $20 million in stablecoins and Ethereum on Thursday.
- The funds were transferred to a newly created wallet address, with some of the funds subsequently moved to the cryptocurrency exchange Binance.
- The activity is suspected to be a theft, according to blockchain analysis firms and a pseudonymous blockchain sleuth.
A US government wallet tied to the 2016 Bitfinex exchange hack was drained on Thursday in what an analyst described as likely theft, according to a report by Decrypt. Over $20 million worth of stablecoins and Ethereum were transferred from the wallet to a new address. Some of those funds were then moved to Binance, the largest crypto exchange by volume.
Theft From Government Wallet
The blockchain analytics firm Arkham Intelligence highlighted withdrawals from the lending protocol Aave in a tweet. This was the first activity on the wallet in 8 months. $125 million of the stablecoin Tether and $55 million of USDC stablecoins were withdrawn and sent to a new wallet address. Along with $446,000 worth of Ethereum and $137 million of interest-bearing aUSDC tokens.
Analyst ZachXBT said the activity appeared to be theft, with the funds likely flowing to exchanges instantly. The Department of Justice, who controls the wallet, did not immediately respond to requests for comment from Decrypt.
Funds Moved to Binance
The recipient wallet proceeded to swap stablecoins for Ethereum using 1inch exchange. It then shuffled Ethereum in $40,000 chunks to a Binance deposit address, which ZachXBT flagged as suspicious.
In total, $320,000 worth of Ethereum was sent to Binance at the time of writing. Meanwhile, $80,000 worth of Ethereum splintered off into other wallets.
The government-controlled wallet was left virtually empty, with only $127 worth of cryptocurrency remaining.
Background on the Bitfinex Hack
Bitfinex was hacked in 2016 by a couple who later pleaded guilty to money laundering. They took advantage of a security breach to seize $3.6 billion worth of digital assets, which were later seized by authorities.
The wallet that received the suspicious transfers last week was created less than a week ago. It received its initial funding from the Australian exchange CoinSpot.
Conclusion
In summary, a hacker appears to have stolen over $20 million in cryptocurrency from a US government wallet tied to the Bitfinex exchange hack. The funds were quickly transferred to Binance and other wallets in an effort to launder and cash out the money. The brazen theft highlights the risks that persist around cryptocurrency hacks and the challenges authorities face in securing seized digital assets.
