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- On-chain data suggests the U.S. government may have hacked wallets to seize $14 billion in Bitcoin.
- Analysts question the official story linking the BTC to Cambodia’s Prince Group scam network.
Fresh on-chain data has raised questions about the U.S. government’s recent $14 billion Bitcoin seizure. While the authorities said the assets were linked to the Cambodia-based Prince Group crime syndicate, blockchain analysts spotted irregularities suggesting the wallets might have been hacked and not seized.
According to on-chain investigator ZachXBT, several wallet addresses listed in the government’s forfeiture request were previously identified as compromised in the “Milk Sad” report, which detailed vulnerabilities in specific Bitcoin private keys.
What’s most interesting is wallet addresses listed in the US government $14B (127K BTC) seizure previously were named in a Milky Sad report ~2 years ago for having vulnerable private keys and now the USG says they have custody of them. https://t.co/sHNwMXhLKH pic.twitter.com/icLWKU33kC
— ZachXBT (@zachxbt) October 14, 2025
The seized wallets were inactive since 2020, when a major mining pool connected to the Prince Group was hacked. This has led to speculation that the U.S. recovered the funds through exploitation of these weaknesses, rather than through traditional seizure procedures.
The official story attributes the assets to Cambodian human trafficking compounds and scam operations through the Prince Group. However, the timing of the wallet movements and their technical pattern have led many to conclude that law enforcement, or forces acting on its behalf, might have taken a more direct approach.
Strategic Reserve or Digital Offensive?
The U.S. Treasury, along with the U.K., announced 146 sanctions against individuals and firms linked to the Prince Group and its supposed leader, Chen Zhi. It sought to confiscate 127,271 BTC, worth roughly $15 billion, as part of the group’s laundered proceeds.
If the government indeed acquired these funds by hacking, it could signal a move towards a more aggressive enforcement policy on crypto. Analysts observe that the U.S. has been considering creating a Strategic Bitcoin Reserve. Traditionally, seized digital assets are auctioned off or reimbursed to victims. However, if the assets originate from unclaimed or criminally tainted sources, the government could retain them, thereby growing its Bitcoin holdings without actually having to purchase them on the open market.
Prince Group’s Alleged Laundering Network
Authorities say Prince Group had more than ten forced-labor camps in Cambodia, where trafficked workers were forced to scam victims over the internet. Reports say the organization bribed local officials and was tipped off by officials in both Cambodia and China to escape raids.
Investigations also revealed that the group laundered illegally sourced funds through mining firms, including Warp Data and Lubian, which was once one of the world’s largest Bitcoin mining operations. These entities allegedly laundered stolen BTC and USDT through mirror sites and shell companies to convert them into fiat currency.
The U.S. Treasury has also blocked Huione Group, which it has accused of aiding in the laundering of $4 billion between 2021 and 2024, from the U.S. financial system. Collectively, scam operations in Southeast Asia have been estimated to have defrauded victims of $16.6 billion.
The hack comes on the heels of a year of mounting crypto-related hacks in 2025, with the Lazarus Group, a North Korean hacker outfit, stealing $1.5 billion from Bybit, the WOO X exploit that stole $14 million, and the individual wallet hack that stole $100 million.
