How a hacker pulled off the largest Bitcoin hack in 2020, now worth $14b

A quiet Bitcoin heist worth billions of dollars has just been brought to light over four years after it happened, now ranking as the largest in industry history.

Summary

• A record Bitcoin hack has just been uncovered, after on-chain investigations revealed that an attacker stole 127,426 BTC from LuBian back in 2020.
• At today’s prices, the stolen funds are worth nearly $15 billion.
• Hacker still holds almost all the coins, with barely any major movement since the theft.

According to blockchain analytics firm Arkham Intelligence, the hack targeted LuBian, a Chinese mining pool that once ranked among the world’s largest. At its peak in 2020, LuBian controlled close to 6% of the Bitcoin network’s total hash rate, with mining operations spread across China and Iran.

Investigations revealed that the attack took place on the firm around December 28, 2020, when hackers drained 127,426 BTC (BTC) from LuBian, worth around $3.5 billion at the time. A day after that attack, another $6 million in BTC and USDT (USDT) was stolen from a Bitcoin Omni-layer address linked to the pool.

Despite the size of the breach, neither LuBian nor the attacker ever disclosed the incident publicly. Arkham identified and confirmed the hack based on years of unexplained on-chain activity, linking the missing funds to a co-ordinated cyberattack.

How the LuBian hack happened

Arkham’s analysis suggests LuBian may have been using a weak private key generation method at the time, one vulnerable to brute-force attacks. The hacker likely exploited this flaw in the system, draining over 90% of the pool’s BTC in two days.

On December 31, LuBian tried to secure its remaining assets by moving them to recovery wallets. They also attempted to contact the hacker directly, by using the Bitcoin OP_RETURN function to embed pleas into blockchain transactions.

The company spent roughly 1.4 BTC to send over 1,500 messages to the hacker, begging for the stolen BTC to be returned. However, all that effort failed, and the hacker still holds the stolen coins. Most of this has remained untouched for years, except for a recent wallet consolidation in July 2024.

Arkham added that LuBian managed to retain about 11,886 BTC, now worth $1.35 billion. But with Bitcoin’s price rising since 2020, the value of the stolen stash has ballooned to roughly $14.5 billion, making the hacker one of the largest BTC holders on Arkham’s database, ranking even ahead of the 2011 Mt. Gox attacker.

Hacks and scams have long remained a persistent problem for the crypto industry. So far this year, over $3.1 billion has been lost to a mix of major exchange breaches, protocol exploits, and phishing attacks

With losses piling up year after year, pressure is mounting for stronger security measures, especially as attackers grow more sophisticated with advancing technology.