Three facts: How did the United States "take away" Bitcoin without capturing Chen Zhi? So, how did the United States take away Chen Zhi's Bitcoin without arresting him? Here, we need to clarify 3 facts.

First, Chen Zhi's Bitcoin is worth 15 billion dollars, which does not mean he fraudulently took 15 billion dollars from China. This large amount actually mostly comes from the premium of Bitcoin. In comparison, the telecommunications fraud business is just one of the channels through which Chen Zhi makes money.

Second, the 120,000 Bitcoins were not taken by the United States in October this year, but were moved to a wallet controlled by the U.S. government as early as June-July 2024. Recently, the United States simply announced the decision to confiscate them.

Third, not all these Bitcoins come from fraudulent funds; a considerable portion was mined by Chen Zhi himself. Yes, Chen Zhi is not only a big shot in electrical fraud but also a mining tycoon.

--- Mining history: Rubi Mining's 6% computing power. Before 2020, Chen Zhi founded the mining company Rubi Mining. At its peak, Rubi accounted for about 6% of global Bitcoin mining.

There are rumors from the outside that Rubi is also associated with the Bitcoin business of the Iranian Islamic Revolutionary Guard.

These Bitcoins mined were stored in Rubi's Bitcoin wallet and had never been traded. This is easy to understand; such a large amount of money is enough to create huge waves in the Bitcoin market, so it certainly could not be stored in an exchange.

Then on December 28, 2020, the roadside suddenly announced that the Bitcoins it mined had been stolen. Although these Bitcoins were stolen, tracking by Bitcoin detectives found that they had been transferred to another wallet cluster.

Many speculate that this is Chen Zhi crying thief to catch a thief, to cover up the source of funds or evade regulation.

--- Money laundering tricks: Dirty coins mix into mining pools to become white. Why does Chen Zhi do this? Bitcoin detectives have traced that a considerable portion of the Bitcoins defrauded from Americans were integrated into Rubi's wallet after 3 transfers.

In other words, Chen Zhi put the Bitcoins obtained from scams and those mined into the roadside wallet. This way, the dirty coins were washed clean, and the roadside could claim that all of it was mined.

Then the roadside said he was robbed; theoretically, this money would no longer be considered fraudulent funds, so it would be reasonable and legal for Chen Zhi to take this money.

--- On-chain naked run: NCET's tracking black technology. However, he underestimated the tracking ability of the Americans. Bitcoin transaction records are in the blockchain ledger; each transaction's payer, payee, and amount are public. Although this address does not directly correlate to a real-world identity, through on-chain analysis and external data, the flow of funds can still be traced.

Therefore, after receiving the report, the National Cryptocurrency Enforcement Team (NCET) under the U.S. Department of Justice began to intervene and trace on-chain. NCET discovered that these roadside Bitcoins frequently crossed paths with funds from pig-butchering scams, ultimately pointing to 12 core wallet addresses.

Through correlated analysis of exchange KYC data, cross-border capital flow records, and social media clues, NCET confirmed that Chen Zhi was the ultimate beneficiary of this criminal network and locked onto a non-custodial cryptocurrency wallet, also known as a cold wallet.

--- Cold wallet: How was it cracked? A cold wallet refers to wallets that cannot be accessed online to the user's private key. This storage method can effectively prevent online attacks and hacker theft due to its offline nature.

How to store the wallet? For example, you can memorize the private key in your mind, or print it or write it down on paper, then lock it in a safe to ensure it is completely offline during storage. Of course, there is also a hardware wallet where the private key is stored in a dedicated hardware device, kept offline. As long as the hardware device has not been compromised, the private key is absolutely secure.

Considering Chen Zhi has a total of 120,000 Bitcoins, he certainly wouldn't remember them in his head or print them out, so it's highly likely that he stored the private key in a cryptographic hardware device. Then, how did the U.S. take away these Bitcoins? Currently, the U.S. Department of Justice is vague, but people in the circle believe there are two possibilities.

--- Cracking faction: 256 bits can't withstand 'random number failure'. The first possibility is that the Americans exploited vulnerabilities to crack Chen Zhi's Bitcoin private key. The Bitcoin private key is essentially a 256-bit binary random number, usually represented in hexadecimal format, as each hexadecimal character represents 4 bits, so the key is a long string of 64 characters.

For example, how is a Bitcoin private key generated? We can simply illustrate with an example. We can take a 1 yuan coin, mark one side as 1 and the other side as 0, and then toss it 256 times; this gives us a 256-bit binary sequence, which is a private key. In reality, it's not tossing a coin but generating a tail random number through a computer and then performing a one-way hash to generate a 256-bit binary string. If the string meets the conditions, the private key is generated.

It seems simple, but in reality, it's impossible to obtain two identical strings by tossing a coin or using a computer-generated method, because 2 to the power of 256 exceeds the total number of atoms in the universe.

Such a low probability means that two people cannot produce the same private key. Therefore, theoretically, the Americans cannot crack Chen Zhi's private key without capturing him. But the problem is that this is only theoretical.

The bug in this algorithm is that your coin-tossing method is truly random and not biased. If you have a biased toss, the likelihood of a single outcome increases significantly. In simple terms, the roadside secret medicine generator might be broken, resulting in the same number appearing in one or several positions.

There is also another saying that the U.S. discovered that the roadside wallet algorithm only used a 32-bit seed, which in itself is not very secure. For the U.S. government, which has virtually unlimited computing power, offline brute-force cracking of private keys becomes an extremely easy task. Then the money that Chen Zhi earned through mining and fraud was all taken away by the Americans together. Indeed, eggs should not be placed in one basket.

--- Wrench faction: $5 leverages $15 billion. The second possibility is that there are insiders; there is a joke circulating in the crypto world: no matter how many Bitcoins you have, no matter how unbreakable your encryption algorithm is, a $5 wrench can force you to hand over your private key. This method of attack is called the $5 wrench attack.

This method of attack precisely strikes at the weakest point of Bitcoin security. The one managing the private key is a human, and as long as it's a human, there are weaknesses. If a wrench is pressed against your vital part, if you don't hand over the private key, you'll get smashed. Will you hand it over? Now this wrench is in the hands of the Americans, and although it's not aimed at Chen Zhi, who knows if it has ever been aimed at those around Chen Zhi?

If done properly, it is very easy to find an insider. There are different rumors about who the insider is.

Some say that the Thai police first captured Chen Zhi's little brother. Under the watchful eyes, what can be hidden? The little brother quickly revealed that his computer contained the withdrawal mnemonic phrase for Chen Zhi's cold wallet, and then the Thai police handed the mnemonic to the U.S., which calculated the corresponding wallet address's hash value through it and then transferred the Bitcoins away. Others say that FBI agents infiltrated Cambodia disguised as financial analysts, contacted Jin Jie, who was responsible for safeguarding Chen Zhi's private key, and then persuaded Jin Jie to betray them with an offer of a waiver guarantee and a cash fee of 1 million dollars, revealing the storage location and unlocking method of the cold wallet.

Then the U.S. used its power to obtain this cold wallet and successfully unlocked it. Others say that the Americans did not actually crack these Bitcoins and did not get Chen Zhi's cold wallet; they merely froze Chen Zhi's Bitcoins.

--- Multi-signature freeze: Why is there a missing key? Because from Chen Zhi's wallet address perspective, his wallet is a multi-signature wallet that requires n keys to open together.

You can understand it like the missile launch control system of a Soviet nuclear submarine requires both the minister and the political commissar's keys to be inserted at the same time to start. If any one key is lost, it cannot be started.

Although the Americans did not capture Chen Zhi, many of his close associates are living extravagant lives in Western countries. If one is captured, and that person happens to have one of the keys, then Chen Zhi's wallet would also be rendered useless and cannot be opened again.

Since these Bitcoins have turned into dead money, the U.S. can announce that they will be frozen and incorporated into reserves.

--- Rumors are rumors: The coins are still there, but the person is gone. Of course, these are rumors; no one knows exactly what the U.S. Department of Justice is doing. All we know is that Chen Zhi has not dared to spend a single Bitcoin he earned after decades of hard work; they are all here. As a result, they were taken by the Americans.

Well, this much money is enough for the Americans to pay 4 days of U.S. debt interest.

--- National Reserve: Just catch 7 more Chen Zhi and it will be enough. According to the Trump team's plan at the beginning of the year, these confiscated Bitcoins may be incorporated into the United States' national reserve system in the future. The entire U.S. national reserve system plans to reserve 1 million Bitcoins.

In other words, just Chen Zhi's portion has already accounted for 1/8 of the reserve amount. Catching 7 more Chen Zhi would complete the U.S. reserve task. Therefore, Chen Zhi was targeted by the U.S. not because he defrauded the Americans, but because he possessed wealth that even the U.S. government coveted.

Just like Zhao Changpeng was harvested by the U.S., it's not because he was money laundering, but simply because he had money, that's all. So even if Chen Zhi tries to find a backer, he can only temporarily hold this wealth and cannot possess it long-term; sooner or later, it's someone else's meat in the bowl.

--- Black eats black: Refund? It doesn't exist. Speaking of which, Chen Zhi is not the first to be harvested. Not long ago, didn't the British government also confiscate Bitcoin worth 49.35 billion yuan from Qian Zhiming? This money was all taken from the domestic public through illegal fundraising.

Therefore, the seizure of Chen Zhi's Bitcoins appears to be a victory of justice over crime, but in essence, it is a black eat black scenario by the U.S., even if it is under the guise of the law; it fundamentally will not return to the victims. The future of the crypto world may no longer be a haven for gray industries but a new battlefield for U.S. offshore fishing.

--- Last words. What can the big shots in the crypto world do even if they are unwilling? From the moment they left China, they had no backers, and no one spoke for them. Ultimately, fraudsters can't compete with robbers. Chen Zhi fell, and the U.S. feasted.