CoinDesk report:
Stablecoins worth over $20 million and Ethereum have been transferred out of a wallet containing funds seized by the US government on Thursday, with assets related to the 2016 Bitfinex hack moved to an address five days ago, according to a blockchain analyst who described it as a possible theft.
Some of the funds have now been moved to so-called “instant” exchanges, including one that obtained liquidity from Binance, an offshore exchange and the world’s largest cryptocurrency trading platform.
Minutes before the transfer occurred, blockchain analytics firm Arkham Intelligence highlighted the withdrawal of a $1.25 million stablecoin loan on Twitter. The company stated that this was the first time these funds had been utilized in eight months.
According to Arkham’s platform, $5.5 million worth of USDC stablecoins have been withdrawn from Aave. These funds were subsequently sent to a wallet starting with “0x348,” alongside $446,000 worth of Ethereum and $13.7 million worth of aUSDC, an interest-bearing token representing USDC deposited in the Aave lending market.
Two years ago, the government-controlled wallet received millions of dollars in USDT. On the same day, it also received a substantial amount of Aave-based tokens equivalent to Tether.
Anonymous blockchain detective ZachXBT described this activity as “sinister” on Twitter. The detective said that the most likely reason for these funds to move is due to “theft”.
Bitfinex was hacked in 2016 by a married couple from New York City who later admitted to a money laundering conspiracy. According to a press release from the US Department of Justice, Ilya Lichtenstein and Heather Morgan exploited vulnerabilities in the exchange, resulting in the seizure of $3.6 billion worth of digital assets in August 2023.
When asked if these transfers were related to law enforcement activities, the Department of Justice did not immediately respond.
On Thursday, the wallet that received millions of dollars in government-associated funds started using the exchange aggregator 1inch to convert stablecoins into Ethereum. It then began transferring Ethereum blocks worth $40,000 to Binance’s deposit address, which ZachXBT flagged as suspicious behavior.
At the time of writing, $320,000 worth of Ethereum has been sent to the exchange. Meanwhile, $80,000 worth of Ethereum has been split into other wallets.
Commenting on the transfer to Binance, ZachXBT clarified that transfers to Binance do not necessarily go to the leading cryptocurrency exchange. Instead, they appear to be sent to so-called “nested exchanges” that use Binance as a liquidity source.
Regarding the wallet starting with “0x348,” it conducted its first transaction less than a week ago. The wallet that provided funds to it received its initial funds two years ago from the Australian cryptocurrency exchange CoinSpot, which operates outside of any other jurisdiction.
At the time of writing, the government-controlled wallet is nearly empty. All of its assets have disappeared, except for a Donald Trump-themed meme coin worth $127.
Editor:
Andrew Hayward
Editor’s Note: This report has been updated after publication to clarify the context of the transactions involving Binance.