This week, Arkham Intelligence reported that hackers have allegedly stolen $20 million worth of cryptocurrency from U.S. government wallets, including assets in USD Coin (USDC), Tether (USDT), aUSDC, and Ethereum (ETH).
The theft occurred on October 24, 2024, when a wallet linked to the U.S. government, which had been dormant for eight months, suddenly executed suspicious transfers. Arkham Intelligence indicated that the attacker has already begun laundering the proceeds through addresses associated with known money laundering services.
The compromised wallet reportedly moved approximately $1.25 million in USDT and $5.5 million in USDC from the DeFi platform Aave. Following this, around $13.7 million in aUSDC and $446,000 in Ethereum were transferred to a newly created wallet.
The U.S. government is one of the largest holders of cryptocurrency globally, with estimates suggesting it controls more than 1% of the total Bitcoin supply. Most of these holdings stem from law enforcement seizures during criminal investigations.
The government has seized Bitcoin on several notable occasions, including the infamous Silk Road case in 2013, where nearly 174,000 BTC were confiscated. These seizures have significantly contributed to the government’s current holdings.
While the U.S. government does not typically disclose the exact size of its cryptocurrency holdings, blockchain analytics firms regularly monitor wallets believed to be associated with government accounts for any transfers.
The government often auctions off seized Bitcoin through the U.S. Marshals Service, but it has also accumulated substantial amounts through various enforcement actions over the years.
Former President Donald Trump previously pledged not to sell any additional Bitcoin held by the U.S. government during his remarks at the Bitcoin 2024 conference in Nashville. He stated: “If I am elected, it will be the policy of my administration to keep 100% of all Bitcoin that the U.S. government currently holds or acquires in the future.”
However, Trump’s plans faced a setback earlier this month when the U.S. Supreme Court declined to hear a case regarding ownership of over $4.3 billion in Bitcoin related to the Silk Road case. This decision could potentially allow the Biden administration to sell off these holdings.
The theft of $20 million from U.S. government wallets highlights significant vulnerabilities in securing public funds within decentralized finance (DeFi).