## China Accuses U.S. of State-Sponsored Bitcoin Heist

A Chinese cybersecurity watchdog has made explosive allegations against the U.S. government, claiming involvement in a **major cryptocurrency heist** involving **127,000 stolen bitcoin** – now valued at approximately **$13 billion**. This accusation escalates tensions surrounding a years-long mystery that has captivated the crypto world.

China’s **National Computer Virus Emergency Response Center (CVERC)** released a technical report alleging that the **U.S. Department of Justice seized BTC** that was originally stolen in a **2020 hack** targeting the **LuBian mining pool**. At the time, the hacked coins were linked to **Chen Zhi**, chairman of Cambodia’s Prince Group, who now faces U.S. indictment for allegedly operating a large-scale crypto fraud scheme.

### Advanced Hacking Tools Point to State-Level Involvement

The CVERC report outlines a timeline suggesting the hack was executed using **advanced tools**, indicative of a **"state-level hacking organization"**. This claim was reported by the **Global Times**, a Chinese state-owned newspaper affiliated with the Communist Party of China’s official People’s Daily.

For nearly **four years**, the stolen bitcoin remained untouched, and the hack largely went unnoticed. Then, in **mid-2024**, the massive stash was quietly transferred to new wallets. Blockchain analysis firm **Arkham** later tagged these wallets as belonging to the **U.S. government**.

### Conflicting Narratives: Law Enforcement vs. State-Sponsored Theft

CVERC’s analysis directly challenges the U.S. narrative that the funds were **criminal proceeds**. Instead, the agency contends that the seizure may have been the final phase of a **long operation** involving the same attackers responsible for the original theft.

The **U.S. maintains** that the seizure was a **legitimate law enforcement action**. However, China views it as a **provocative act** that could escalate tensions between the two nations. CoinDesk has reached out to the U.S. Treasury and Department of Justice for comment but had not received a response by press time.

![Glasses in front of monitors with code](https://www.coindesk.com/_next/image?url=https%3A%2F%2Fcdn.sanity.io%2Fimages%2Fs3y3vcno%2Fproduction%2F97d574b518d64c128fb00fa2568f05d9c01d18e1-1920x1080.jpg%3Fauto%3Dformat&w=1920&q=75)

CVERC claims the hack was conducted by a "state-level hacking organization" and suggests the US seizure was part of a larger operation involving the same attackers.

China Accuses U.S. of State-Sponsored Bitcoin Heist: 127K BTC Seized in $13B Crypto Hack

The **privacy coin Zcash (ZEC)** is currently leading the crypto market, rising while everything else is struggling. It ripped a gain of 1,250% in the last three months alone, vaulting back into the top tier of coins by market value.

Is this strength the result of durable value creation, or is it a hot stove waiting to burn those who invest?

![An investor looks up at a screen displaying stock price data while sitting in front of a few other screens with similar data as a coworker talks to another in the background.](https://g.foolcdn.com/image/?url=https%3A%2F%2Fg.foolcdn.com%2Feditorial%2Fimages%2F841643%2Finvestor-on-trading-floor_large.jpg&w=1200&op=resize)

## Why Zcash is Valuable

Unlike many other cryptocurrencies, **Zcash is obviously valuable**.

At a high level, Zcash inherits **Bitcoin's** supply policies, which is a massive point in its favor. Like Bitcoin, Zcash has an unchanging hard cap of 21 million coins that can ever exist, and a mining-based issuance schedule that **halves its reward about every four years**, steadily reducing new supply entering the market and creating the conditions for scarcity to boost its price over the long term. Zcash's second halving arrived in late November 2024; historically, at least in the case of Bitcoin, the 18 months following the halving tend to be very profitable times to be a holder.

It's undeniable that Zcash's recent surge has been visible enough to overtake the leading rival privacy coins by market cap, and it may portend a broad revival in privacy-focused assets.

On that front, under the hood, the technology of this chain is a major appeal. Zcash popularized the use of **zk-SNARKs**, a form of cryptography that lets the network validate transactions without revealing amounts or counterparties on-chain. In a nutshell, when used properly it's possible to use Zcash in privacy such that nobody will know who you're transacting with or for how much. That **privacy utility** is very different from Bitcoin's transparency, and it is precisely what some investors are seeking as on-chain activity becomes more surveilled by numerous actors.

If you squint, the investment thesis for Zcash looks a lot like a privacy-tilted cousin of Bitcoin's scarcity story, with decreasing new supply and an expanding set of holders who value the asset's specific use case.

## The Policy Headwind is Probably a Dealbreaker

Now, let's take a look at the devil's advocate view of this coin.

From that perspective, Zcash's strongest differentiator, its **privacy features**, is also its heaviest baggage. Policymakers around the globe have repeatedly targeted privacy coins with new regulations or outright bans, which constrains crypto exchange listings, liquidity, and mainstream adoption, especially among the largest potential adopters like financial institutions.

These aren't solely academic concerns. Japan effectively banned privacy coins from domestic exchanges in 2018, leading platforms to pull Zcash. South Korea required exchanges to delist privacy coins in 2021 as part of tightening anti-money-laundering rules. Europe has also dealt with intermittent delistings and shifting regulations, leading to a frustratingly unpredictable access environment. It's probable that the E.U. will prohibit privacy coins altogether, contingent upon implementing specific regulations.

So whereas Bitcoin has a scarcity narrative that is increasingly institution-friendly, Zcash's privacy design makes it far more likely to be left out in the cold, especially if regulators continue to aggressively disfavor or attempt to stomp out the privacy coin segment as a whole. That doesn't negate Zcash's utility, but it does mean the path to durable adoption depends on a shift in regulatory disposition as a whole, which does not appear to be happening, and might not ever.

Moreover, this asset's price is obviously on a hot streak right now. Another near-term risk is that buyers today could be stuck underwater for an uncomfortably long time if sentiment suddenly cools or exchange listings tighten again.

Therefore, Zcash probably isn't the right pick for most investors, even if it will probably continue to gain in value quite quickly for a while longer. A reasonable plan if you are still intrigued but (appropriately) cautious is to treat Zcash as a niche position, sized small, and accumulated gradually on weakness.

If regulators eventually allow access to this coin to widen, Zcash could compound in value significantly thanks to its Bitcoin-like issuance. But if compliance frictions re-intensify or remain prohibitive -- as they most likely will -- expect long, choppy stretches without much reward once this rally fades.

This coin's wild run probably has more gas in the tank.

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