Over $20M in Cryptocurrency Transferred from U.S. Government Wallet, Sparking Concerns of Unauthorized Activity

On Thursday, over $20 million in cryptocurrency was transferred from a U.S. government wallet. Notably, this wallet is tied to funds seized in the 2016 Bitfinex hack.

On Thursday, over $20 million in cryptocurrency was moved out of a U.S. government wallet linked to funds seized in the 2016 Bitfinex hack, sparking blockchain analysis firms’ attention due to the suspicious nature of the transfer.

The funds, which included both stablecoins and Ethereum, were transferred out of a wallet known to be linked to the Department of Justice (DOJ). Notably, this wallet had been largely inactive for the past eight months.

As the transactions unfolded, a key observation was made. Part of the funds were being sent to instant crypto exchanges, with one of the exchanges utilizing Binance for liquidity. This occurred just minutes after Arkham Intelligence reported large withdrawals from the lending platform Aave, raising suspicion about the wallet's activity.

According to Arkham, $1.25 million in Tether (USDT) and $5.5 million in USD Coin (USDC) were withdrawn from Aave. These funds were sent to a wallet starting with “0x348,” and they included $446,000 in Ethereum and about $13.7 million in aUSDC, an interest-bearing token from Aave. Interestingly, two years ago, this government wallet had received large amounts of aUSDC and Aave-based Tether tokens.

CoinChapter reached out to the DOJ for comment on whether these transfers were related to any law-enforcement activity, but our requests have yet to be answered. Meanwhile, on social media, on-chain analyst ZachXBT described the transfer activity as “nefarious,” alluding to the possibility of an unauthorized movement.

After receiving the transferred funds, the “0x348” wallet began using the exchange aggregator 1inch to convert stablecoins into Ethereum. It then sent $40,000 batches of Ethereum to a wallet associated with a nested exchange connected to Binance, according to blockchain analysis. In total, it directed $320,000 of Ethereum to the exchange wallet and split an additional $80,000 into smaller wallets.

Further analysis revealed that a nested exchange likely received some assets linked to Binance's liquidity. Notably, blockchain analysts have observed that this separate platform utilizes Binance's liquidity without any direct affiliation to Binance itself.

Interestingly, the “0x348” wallet, which received funds from the US Government crypto wallet, was created recently. However, upon further investigation, it was discovered that the wallet is linked to CoinSpot, an Australian exchange, which had funded the wallet two years ago.

It's important to note that CoinSpot operates exclusively within Australia, limiting its transactions outside the jurisdiction. Records show that the exchange had funded the wallet two years prior.

The same DOJ wallet previously contained funds seized from individuals associated with the Bitfinex hack. In 2016, authorities charged New York residents Ilya Lichtenstein and Heather Morgan for their involvement in the breach, which caused the loss of $3.6 billion in digital assets.

At present, the US government crypto wallet is empty, with only a negligible balance of $127 in a Donald Trump-themed meme coin remaining. As the events unfold, blockchain analysts are closely monitoring the case, and it remains to be seen if any additional funds will emerge on public blockchains in the days ahead.