China has reportedly accused the United States of secretly seizing 127,000 Bitcoin worth about $13 billion from the 2020 LuBian mining pool hack, calling it a state-backed cyber operation.
However, the US denied the claim, saying the Bitcoin was lawfully seized in a completely separate fraud case. The dispute renewed global concerns over digital asset sovereignty.
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Sovereignty Clash Over LuBian Funds
China has reportedly accused the US of seizing funds recovered from the LuBian hack under the guise of a law enforcement operation.
The US Department of Justice (DOJ) has reportedly countered these accusations. It said the US legally seized the Bitcoin as part of a fraud probe into Cambodian businessman Chen Zhi, who faces allegations of running crypto scams and human trafficking operations across Southeast Asia.
Last month, the DOJ filed a civil forfeiture case seeking control of approximately 127,271 Bitcoin, valued at over $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 around that time. One major Bitcoin transfer was reportedly made just as the DOJ’s case became public.
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That revelation became the focus of China’s challenge to Washington’s account.
Beijing’s government cybersecurity agency argued that the timing of the transfers did not align with a standard law enforcement seizure.
Instead, it suggested that the movements indicated the US may have gained access to Bitcoin earlier than officially acknowledged.
This latest dispute between China and the US has reignited debate over digital asset sovereignty.
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The tug of war between the two superpowers over Bitcoin highlights a broader issue regarding money that transcends borders. Experts say that crypto enforcement has evolved into a geopolitical tool.
Bitcoin’s status as a non-sovereign asset enables nations to extend their influence through legal systems and technology.
Also, the Financial Stability Board has warned of significant gaps in global crypto regulation. It notes that without a unified framework, countries are acting independently and often for strategic gain.
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In parallel, Beijing’s frustration stems from long-standing fears of Western dominance in blockchain infrastructure and financial surveillance.
China views US control of digital systems as a form of economic leverage and has promoted its own blockchain standards and the digital yuan as a countermeasure.
The US has relied on assertive enforcement, as seen in cases such as Silk Road and Bitfinex, to expand its jurisdiction and reinforce its role in cross-border crypto operations.
However, critics warn that this fragmented approach risks undermining international trust.
Without coordination, major powers apply their own version of justice, turning crypto seizures into instruments of statecraft rather than effective crime prevention.
