Blockchain analytics firm Arkham Intelligence disclosed what appears to be the largest cryptocurrency theft in history, involving 127,426 Bitcoin stolen from Chinese mining pool LuBian in December 2020. The stolen cryptocurrency, valued at $3.5 billion at the time of the theft, now holds a market value exceeding $14 billion based on current Bitcoin prices.

What to Know:

• The hack targeted LuBian, a major Chinese mining pool that controlled nearly 6% of Bitcoin's network hash rate in 2020
• Neither the mining pool nor the perpetrator publicly acknowledged the theft when it occurred four years ago
• The stolen funds remain in the hacker's control, making them the 13th largest Bitcoin holder according to blockchain data

Discovery of Historic Cryptocurrency Theft

The revelation emerged through Arkham Intelligence's blockchain analysis, which identified suspicious transactions from LuBian's wallets beginning December 28, 2020. The mining pool, which operated facilities in China and Iran, lost over 90% of its Bitcoin holdings in the initial breach.

Additional thefts followed in subsequent days. On December 29, hackers extracted approximately $6 million worth of Bitcoin and Tether from a LuBian address operating on Bitcoin's Omni layer. The mining pool responded by moving remaining funds to recovery wallets on December 31.

LuBian's prominence in the cryptocurrency mining sector made the theft particularly significant. As of May 2020, the operation represented one of the world's largest mining pools, contributing substantial computational power to Bitcoin's network security.

Comparison to Recent Exchange Breaches

The LuBian incident surpasses the February 2024 Bybit exchange hack, previously considered among the most substantial cryptocurrency thefts. Bybit lost approximately $1.5 billion when hackers compromised cold storage wallets containing over 400,000 Ethereum tokens through social engineering tactics.

The Bybit breach demonstrated vulnerabilities in multisignature wallet systems. Despite requiring multiple authorization signatures, hackers successfully convinced personnel to approve unauthorized transfers from supposedly secure offline storage.

Both incidents highlight ongoing security challenges facing cryptocurrency infrastructure providers. Mining pools and exchanges continue experiencing sophisticated attacks that exploit both technical vulnerabilities and human factors.

Recovery Attempts and Technical Analysis

Arkham's investigation revealed LuBian's attempts to communicate with the perpetrator through blockchain messages. The mining pool transmitted OP_RETURN messages requesting return of stolen funds, spending 1.4 Bitcoin across 1,516 separate transactions to broadcast these appeals.

These recovery efforts provided investigators with evidence suggesting the breach resulted from algorithmic weaknesses rather than external infiltration. Arkham concluded LuBian likely used flawed private key generation methods susceptible to brute-force attacks, allowing hackers to systematically guess wallet access credentials.

The hacker's response to recovery requests never materialized publicly. Instead, the perpetrator consolidated stolen funds into different wallet addresses as recently as July 2024, indicating continued control over the cryptocurrency.

Current Status and Market Impact

LuBian retained approximately 11,886 Bitcoin following the theft, currently valued at $1.35 billion. The mining pool's reduced holdings reflect the substantial impact of the security breach on its operations and financial position.

Bitcoin's price appreciation since 2020 significantly increased the theft's dollar value. The cryptocurrency traded near $27,500 during the December 2020 breach but has since reached substantially higher valuations, amplifying the hack's financial significance.

The perpetrator now ranks as the 13th largest Bitcoin holder according to Arkham's blockchain analysis. This position places them ahead of the Mt. Gox exchange hacker, whose theft previously represented one of cryptocurrency's most notorious security failures.

Understanding Cryptocurrency Mining and Blockchain Security

Mining pools like LuBian combine computational resources from multiple participants to increase chances of earning Bitcoin rewards. Participants contribute processing power and receive proportional payouts when the pool successfully validates blockchain transactions.

Private keys serve as cryptographic passwords controlling access to cryptocurrency wallets.

Secure key generation requires genuine randomness to prevent hackers from predicting or recreating these access credentials through computational methods.

Brute-force attacks involve systematically testing possible password combinations until discovering correct credentials. Weak randomization in key generation creates patterns that reduce the computational work required for successful attacks.

Closing Thoughts

The LuBian hack represents the largest known cryptocurrency theft by dollar value, though it remained undetected by public analysis until Arkham Intelligence's recent investigation. The incident underscores persistent security vulnerabilities in cryptocurrency infrastructure and the long-term financial impact of successful breaches as digital asset values appreciate.