Approximately 127,271 BTC—valued at about $15 billion at the time—was seized by U.S. authorities after on-chain tracing linked the holdings to an alleged Chinese fraud network. The scale of the action drew attention because it ties together a long-dormant pool theft, a large criminal enterprise, and a public dispute over who ultimately had rightful claim to the coins.
For custodians, treasuries, and trading desks, the case is a reminder that weak key-management can turn “stored value” into recoverable evidence once provenance is established. It also reinforces how quickly dormant supply can become operationally relevant when law enforcement gains control of high-value reserves.
How the coins were allegedly taken
The narrative begins in December 2020, when roughly 127,426 BTC disappeared from a Chinese mining pool known as LuBian. Investigators described the incident as rooted in weak private-key generation (a flawed PRNG) and the absence of stronger safeguards such as multisignature setups or hardware-wallet protections.
Prosecutors say the stolen BTC later became connected to an alleged scam operator identified as Chen Zhi and his Prince Group, which reportedly ran “pig butchering” scams funded by the proceeds. The laundering approach described in the text relied on cycling funds in ways intended to make illicit flows appear legitimate.
U.S. agencies, working with international partners, used blockchain analytics to follow the coins as they moved, commingled, and were re-allocated across wallets associated with the network. That tracing was presented as the basis for the seizure of about 127,271 BTC, with the timeline noting that the coins stayed dormant for years before activity resumed in mid-2024 and culminated in a late-2025 recovery action.
What the dispute and unknowns mean
China publicly challenged the account and accused the U.S. of having “stolen” the funds, arguing that years of dormancy followed by movement in mid-2024 didn’t match a typical hacker cash-out. The text also notes that the U.S. has not disclosed how it ultimately obtained control of the seized BTC, leaving open whether keys were surrendered, sourced from an insider, or acquired through other means.
From a market-structure perspective, the episode highlights two recurring risks: concentrated private-key exposure in mining/custody operations and the liquidity/compliance shock when “tainted” reserves convert into government-controlled supply. The next practical milestone is further legal disclosure: filings that clarify chain-of-custody and the mechanism used to establish control will shape compliance playbooks, exchange handling of provenance risk, and institutional comfort with coins that carry opaque history.