On October 24, a US government crypto wallet suffered a cyberattack which led to loss of more than $20 million worth of Ethereum (ETH) and Stablecoins. The wallet contained funds seized by the government. This hack was similar to the 2016 Bitfinex crypto exchange attack where assets were transferred to a 5-day-old address.
The funds stolen from the crypto wallet are now available on these newly created instant exchanges. One of the exchanges involved sources its liquidity from Binance - the world’s largest crypto trading platform
Arkham Intelligence, a blockchain analytics company, tweeted about huge withdrawals from the Aave lending protocol, minutes before the theft. As per Arkham, it was the first time in 8 months since someone touched the funds.
Arkham Intelligence reported that $5.5 million USDC and $1.25 million of the stablecoin Tether were withdrawn from Aave. The stolen tokens were ultimately transferred to a wallet starting with “0x348” alongside $446,000 worth of Ethereum and $13.7 million of aUSDC, an interest-bearing token that represents USDC deposited in an Aave lending market.
Two years ago, the US government wallet got millions of dollars worth of aUSDC. It also received a substation amount of Aave-based tokens for Tether. Blockchain sleuths are speculating that the transfer of funds on Thursday could be because of theft.
A similar thing happened earlier in 2016 when a married couple from New York hacked Bitfinex. They later pleaded guilty to money laundering conspiracies. The couple, Ilya Lichtenstein and Heather Morgan took advantage of a security breach at Bitfinex to steal $3.6 billion worth of digital assets, revealed the US Department of Justice (DOJ) in an August 2023 press release.
The DOJ didn't explain if the recent transfers seen yesterday were related to law enforcement activities. The wallet that received the US government funds on Thursday went on to use the exchange aggregator 1inch for swapping Stablecoins with Ethereum. They shuffled $40,000 chunks of Ethereum to a deposit address linked to Binance.
Overall, $320,000 worth of Ethereum made it to the exchange while $80,000 was divided into different wallets. ZachXBT who flagged these suspicious transfers first underlined that this necessarily did not go to Binance rather they were sent to a nested exchange which uses the renowned trading platform to source liquidity.
As far as the “0x348” crypto wallet is concerned, it made its first transaction less than a week ago and the wallet that funds it got the first funds just 2 years ago from Coinspot. The Australian crypto exchange do not have the mandate to operate in other countries
As per the last report, the US government-linked crypto wallet is almost empty as all digital currencies from there have vanished except for a Donald Trump-themed meme coin worth $127.