U.S. government crypto wallets may be compromised, as observers alerted the public to suspicious on-chain transactions.

According to Arkham, unknown hackers have possibly stolen $20 million in seized cryptocurrencies like Ethereum (ETH), Tether (USDT), and Circle USD Coin (USDC) from U.S. government-controlled addresses.

The developing story, corroborated by on-chain sleuth ZachXBT on Telegram, might even involve funds confiscated from the Bitfinex hackers. Arkham stated that address 0xc9E received seized assets from at least one wallet mentioned in the Bitfinex court case documents.

Bitfinex was hacked in 2016 by Ilya Lichtenstein and his rapper partner Heather Morgan, AKA Razzlekhan. The duo successfully stole about $8 billion in Bitcoin (BTC) from the crypto exchange. Nearly a decade later, federal prosecutors asked for a five-year sentence to be issued to Lichtenstein.

Transactions suggest the hackers started selling and laundering the funds after breaking into U.S. government wallets, Arkham said in its Oct. 24 post about the suspicious activity.

The funds were moved to wallet 0x348 which has begun selling the funds to ETH. We believe the attacker has already begun laundering the proceeds through suspicious addresses linked to a money laundering service.

Arkham

Before the blockchain analytics provider flagged the U.S. government transactions, Arkham noted that government wallets withdrew over $6.5 million in crypto from decentralized finance lender Aave. Etherscan data also showed that one U.S. government address paid up to $1,000 in Ethereum fees to move about $100,000 in cryptocurrencies.

This is a developing story.