China Accuses U.S. of Illegally Seizing 127,000 Bitcoin

China’s National Computer Virus Emergency Response Center (CVERC) has accused the United States government of unlawfully taking 127,000 stolen Bitcoins (BTC). These Bitcoins, worth over $13 billion, were originally hacked in 2020 from a Chinese mining pool. 

US Government Denied China’s Claims

CVERC says a state-level hacking group, linked to Western intelligence, carried out the original hack. 

In its latest report, CVERC suggested that the U.S. seizure of the Bitcoin was not just a law enforcement action but a coordinated operation involving the same people behind the 2020 theft. The Chinese agency described this as a “provocative act” that threatens international trust in cross-border cyber investigations.

In response, U.S. authorities have denied the allegations, stating that the seizure was a lawful effort to target funds linked to criminal activity. Officials also said the operation complied with international law and aimed to recover illegal digital assets used in cybercrime. 

Meanwhile, this controversy shows how cybersecurity issues are becoming more politicized between the two powerful nations. Analysts warn that the disagreement over the seized Bitcoin could worsen diplomatic tensions, especially regarding digital finance rules and blockchain investigations.

China and Crackdown on Bitcoin

In January, Ki Young Ju, CEO of CryptoQuant, stated that China sold 194,000 Bitcoin units taken from the PlusToken Ponzi scheme. As reported by TheCoinRise, the Chinese government sold this large amount of Bitcoin shortly after they seized it.

The PlusToken scheme was one of the latest cryptocurrency scams in history. It tricked investors out of billions of dollars by promising high returns on crypto investments. In return, the Chinese government seized the assets and took control of a large amount of BTC.

Notably, China’s strict enforcement against digital asset-related offenses contrasts with Hong Kong’s adoption of crypto-friendly regulations. These regulations are designed to standardize the digital asset ecosystem, protect investors, and promote innovation. As such, the People’s Bank of China (PBoC) addressed cryptocurrency regulation and decentralized finance in its financial stability report.

US Government Continuous Transfer Spree

In December 2024, the United States government transferred $33.6 million worth of cryptocurrencies from a wallet holding funds seized from FTX Alameda Research. 

The activity involves managing crypto assets seized by the U.S. government due to legal cases. Undoubtedly, the government has done similar transfers, usually before auctions or sales.

While the exact purpose of these transfers remains unclear, the movement of such large sums sparked speculations within the crypto community. Not long after, the government transferred almost 19,800 BTC, worth $1.9 billion, to Coinbase.

Recall that the government also transferred $922 million worth of seized BTC. The transfer came hot on the heels of Bitcoin’s price breaking the $60,000 barrier.