China has reportedly accused the United States of secretly seizing 127,000 Bitcoins worth about $13 billion from the 2020 LuBian mining pool hack, calling it a government-backed cyber operation.
However, the US has denied the allegation, saying the Bitcoin was legally seized in a completely different fraud case. The controversy has raised global concerns about digital asset sovereignty.
Sovereignty Conflict over the LuBian Fund
China has reportedly accused the US of seizing funds recovered from the LuBian hack under the guise of law enforcement action.
The US Department of Justice (DOJ) has reportedly disputed these allegations. The DOJ claims that the US legally seized the Bitcoins as part of a fraud investigation involving Cambodian businessman Chen Zhi , who is facing charges of running crypto scams and human trafficking operations across Southeast Asia.
Last month, the DOJ filed a civil lawsuit seeking control of about 127,271 Bitcoins , valued at more than $15 billion. US officials said the move was coordinated with international partners to compensate victims of Chen's network.
Blockchain analytics firm Arkham Intelligence tracked activity from wallets linked to LuBian at the time, with a large Bitcoin transaction reportedly taking place just as the DOJ case was made public.
That finding has become central to China's challenge to Washington's claim.
Beijing's government cybersecurity agency said the timing of the transactions was inconsistent with a standard law enforcement seizure .
Instead, they argue that these movements suggest that the US may have gotten into Bitcoin earlier than officially stated .
The latest spat between China and the US has reignited the debate over digital asset sovereignty.
Bitcoin becomes a geopolitical tool
The tension between the two superpowers over Bitcoin highlights the broader issue of currencies crossing borders . Experts say crypto enforcement has become a geopolitical tool.
Bitcoin's non-state nature allows nations to extend their influence through legal systems and technology.
Furthermore, the Financial Stability Board has warned of a significant gap in global crypto regulation . They found that without a standard framework, countries are acting independently and often to achieve strategic interests.
At the same time, Beijing's frustration stems from long-standing concerns about Western dominance in blockchain infrastructure and financial oversight.
China XEM US control of its digital system as a form of economic leverage and has been pushing its own blockchain standard and digital yuan as a countermeasure.
The US has relied on aggressive enforcement, as in cases like Silk Road and Bitfinex , to expand its jurisdiction and cement its Vai in cross-border crypto activities.
However, critics warn that this Shard approach risks undermining international trust.
Without coordination, major powers apply their own version of justice, turning crypto seizures into tools of national policy rather than effective crime prevention.
