Bitcoin Key Flaw Leads to DOJ Seizure of 127,271 BTC
US Department of Justice agents have seized 127,271 BTC (approx. $15bn) linked to Chen Zhi’s Prince Group money-laundering network after exploiting a Bitcoin key flaw. Investigators traced the funds to predictable private keys generated by the Mersenne Twister PRNG in Lubian mining’s P2WPKH-nested-in-P2SH wallets, first exposed when 136,951 BTC were drained in December 2020. Blockchain analysts Elliptic and Arkham Intelligence confirmed the exploited addresses were tied to the Cambodia-based pig-butchering scam. The vulnerability led to patches in Trust Wallet and Libbitcoin Explorer in 2023. This major Bitcoin key flaw seizure underscores the need for stronger wallet security, review of entropy sources, and could influence Bitcoin network confidence and price volatility.
Bullish
The DOJ’s seizure of 127,271 BTC through the exploitation of a Bitcoin key flaw reduces illicit supply and demonstrates regulatory enforcement, which can bolster investor confidence and drive short-term price support. In the long term, the event highlights critical wallet security gaps, likely accelerating adoption of stronger key-generation practices and fostering network trust. While temporary volatility may arise from security concerns, the net effect is bullish for Bitcoin as supply tightens and regulatory clarity improves.