Tensions Rise as China Claims U.S. Seized $13B in Bitcoin Assets

China has accused the United States of unlawfully seizing 127,000 Bitcoin, worth approximately $13 billion, in what it claims was a coordinated act of cyber theft rather than a law enforcement operation. The allegation, reported by the state-affiliated Global Times, has intensified geopolitical tensions between Beijing and Washington, reigniting debates around digital asset sovereignty. Bitcoin price, meanwhile, remains stable above $105,442 as markets absorb the diplomatic fallout.

China Alleges State-Level Bitcoin Theft

According to China’s National Computer Virus Emergency Response Center (CVERC), the seized bitcoin originated from the LuBian mining pool, a Chinese-operated crypto platform targeted in a major 2020 hack. CVERC asserts that the hack was carried out by a “state-level hacking organization” using advanced cyber techniques consistent with government-backed operations.

The agency alleges that when U.S. authorities seized the bitcoin in 2024, the move was not a routine legal recovery but a continuation of the same operation initiated by the hackers.

China’s report outlines a four-year timeline in which the stolen assets remained untouched before being transferred to new wallets mid-2024. Blockchain analytics firm Arkham later identified those addresses as belonging to the U.S. government, a finding that fuelled Beijing’s suspicions.

Chinese state media now frames the seizure as evidence of U.S. interference in global financial networks, accusing Washington of exploiting blockchain surveillance to assert control over international digital assets. The claim has further strained bilateral relations, with officials in Beijing calling for global oversight on crypto asset seizures by foreign governments.

Washington Rejects Allegations of Wrongdoing

The U.S. government has dismissed China’s accusations, calling them “false and misleading.” Officials maintain that the bitcoin seizure was part of a legitimate law enforcement campaign targeting illicit funds tied to Chen Zhi, a Cambodian businessman and chairman of Prince Group. Chen is facing U.S. charges for large-scale crypto fraud and money laundering, which investigators say used bitcoin to conceal proceeds across multiple jurisdictions.

American authorities insist that the confiscation was consistent with international anti-money-laundering efforts, noting that similar seizures have been executed in cooperation with other nations.

However, China views the action as a politically motivated provocation intended to undermine its digital finance infrastructure. Analysts note that this dispute highlights growing mistrust between the two superpowers in cyberspace, particularly as both nations intensify their efforts to dominate blockchain innovation, cryptocurrency regulation, and financial surveillance technology.

The conflict also reveals the unclear nature of bitcoin ownership and traceability across borders. Although blockchain transparency enables the tracking of large transactions, jurisdictional claims cannot be established in cases involving state actors. Experts caution that unless global mechanisms exist to regulate digital asset recoveries, such cases could set bad precedents in the governance of cyberspace.

Broader Developments in the Bitcoin Ecosystem

This is occurring in the middle of important technical innovations in the Bitcoin network. In early October, the developers of Bitcoin Core released version 30.0 of their infrastructure software, which is a significant update that eliminates the long-standing 80-byte cap on the OP_RETURN functionality.

The change enables users to add larger data packages to transactions, which could potentially broaden the use of Bitcoin beyond payments into other solutions, such as metadata storage and digital identity verification.

The update, described as a policy change rather than a shift in the consensus rule, allows node operators and miners flexibility in setting their own limits. Developers say that it enhances the position of Bitcoin as a versatile, open-source platform while also sustaining the stability of the network. This release is particularly noteworthy due to its timing, which coincides with geopolitical tensions, underscoring the dual nature of Bitcoin as both a financial tool and a strategic digital system.

As the global balance of power evolves in the world of cryptocurrencies, Bitcoin remains a pivotal point of convergence for both innovation and conflict. As of writing, Bitcoin is trading at $105,442, holding firm despite mounting political pressure and renewed scrutiny over state involvement in crypto asset control.