China has accused the United States of orchestrating one of the largest cryptocurrency thefts in history — a $13 billion bitcoin hack — in a move that underscores deepening digital and geopolitical tensions between the two powers. Beijing’s National Computer Virus Emergency Response Center (CVERC) claims the theft of 127,272 Bitcoin from the LuBian mining pool in December 2020 was not the work of cybercriminals but a “state-level hacker operation” directed by the U.S. government.

Beijing’s Claim: A “State-Level” Operation

According to a report released last week by China’s cybersecurity watchdog, the quiet and delayed transfer of the stolen Bitcoin suggests a sophisticated and coordinated effort inconsistent with typical cybercrime activity. The CVERC linked the stolen digital assets to Bitcoin seized later by the U.S. Department of Justice (DOJ) — part of a massive civil forfeiture case tied to Chen Zhi, the chairman of Cambodia’s Prince Group, who was indicted in October on charges of wire fraud and money laundering.

“The U.S. government may have already used hacking techniques as early as 2020 to steal the 127,000 Bitcoins held by Chen Zhi,” the Chinese report alleged, describing it as a “black eats black” operation — a term used in Chinese cybersecurity circles to denote one criminal entity covertly targeting another.

The DOJ’s forfeiture complaint marked the largest crypto seizure in U.S. history. It claims the Bitcoin addresses associated with LuBian received “large sums of cryptocurrency from sources unrelated to new mining,” indicating that the mining pool may have been used as a money-laundering conduit.

Federal prosecutors declined to comment on how or when they obtained control of the stolen assets. However, China’s accusation represents a rare direct challenge to U.S. cyber capabilities, marking another escalation in a widening digital cold war.

Chen Zhi’s Legal Defense and the U.S. Connection

Lawyers for Chen — who remains outside U.S. custody — are seeking to trace the missing Bitcoin, arguing that the government’s allegations are “seriously misguided.” In a court filing this week, attorney Matthew L. Schwartz of Boies Schiller Flexner said his team is working with blockchain analysts to follow the trail of the LuBian funds.

“We are working closely with cryptocurrency experts to trace the Bitcoin that the government seized over a year ago, and which was stolen back in 2020,” Schwartz said in a statement to Bloomberg.

Chen’s defense contends that the U.S. government’s seizure was unlawful and that its case against him conflates money-laundering allegations with broader geopolitical motives. The U.S. Department of Justice has not publicly addressed China’s claims, while the Chinese Embassy in Washington declined to comment.

A Broader Battle Over Cyber Sovereignty

The accusation forms part of a pattern of reciprocal cyber blame between Beijing and Washington. Earlier this year, China accused the U.S. of exploiting vulnerabilities in Microsoft Exchange servers to infiltrate Chinese networks, and in October, Beijing claimed it had “irrefutable evidence” of a U.S. attack on its National Time Service Center, which maintains the country’s atomic clock system.

While U.S. intelligence agencies have repeatedly cited China as a leading cyber-espionage threat, Beijing has turned the narrative around — alleging that Washington’s hacking operations are both extensive and covertly intertwined with economic and law-enforcement objectives.

Analysts say the $13 billion Bitcoin accusation serves a dual purpose: to deflect criticism over China’s own cyber activity and to cast doubt on the legitimacy of U.S. asset seizures tied to international money-laundering cases. The claim also coincides with a period of heightened friction between the two nations, including disputes over semiconductor exports, AI technology restrictions, and sovereignty in cyberspace.

Strategic Implications for Global Cyber Governance

The controversy could complicate ongoing global efforts to create common rules for digital asset governance. If Beijing’s claims gain traction, they could weaken trust in U.S. law enforcement’s role in crypto regulation and embolden other nations to assert data and asset sovereignty over blockchain transactions within their borders.

For Washington, the stakes go beyond a single cyber case — the allegation feeds into a broader narrative of U.S. dominance in the digital economy being challenged by rivals who claim technological self-defense.

As the world’s two largest economies deepen their rivalry in both financial technology and cybersecurity, the LuBian case may become another flashpoint defining the new era of digital geopolitics — where control over code, cryptography, and currency converges with state power.