Coin World News Report:
Stablecoins worth over $20 million and Ethereum have been transferred from a wallet containing funds confiscated by the US government on Thursday, to an address five days ago, which a chain analyst describes as a possible theft related to the 2016 Bitfinex hack.
Some of the funds have now been moved to so-called instant exchanges, including one that obtains liquidity from Binance, an offshore exchange and the world’s largest cryptocurrency trading platform.
Minutes before the transfer, blockchain analysis firm Arkham Intelligence highlighted the withdrawal of a loan agreement with Aave on Twitter. The company stated that this was the first time in eight months that these funds had been utilized.
According to Arkham’s platform, $1.25 million in stablecoins were withdrawn from Aave, with $5.5 million worth of USDC subsequently sent to a wallet starting with “0x348”, alongside $446,000 worth of Ethereum and $13.7 million worth of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’ worth of 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 “nefarious” on Twitter. The detective suggested that the most likely scenario is that these funds are being moved 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 are related to enforcement actions, the Department of Justice did not immediately respond.
On Thursday, the wallet that received millions of dollars in government-associated funds began using the exchange aggregator 1inch to convert stablecoins into Ethereum. It then started transferring Ethereum blocks worth $40,000 to Binance’s deposit address, which ZachXBT flagged as suspicious activity.
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 transfers to Binance, ZachXBT clarified that the transfers are not necessarily going to leading cryptocurrency exchanges. Instead, they appear to be sent to so-called “nested exchanges” that use Binance as a liquidity source.
When it comes to the wallet starting with “0x348”, it made its first transaction less than a week ago. The wallet that funded it received its initial funds two years ago from the Australian cryptocurrency exchange CoinSpot, which operates outside any other jurisdiction.
At the time of writing, the government-controlled wallet is nearly empty. All of its assets have disappeared, except for $127 worth of Donald Trump-themed meme coins.
Editor:
Andrew Hayward
Editor’s Note: This report has been updated after publication to clarify the context of the interactions with Binance.
