DOJ wins authority over $1.2 billion in Binance hack funds

The U.S. Justice Department has court authorization to seize or restrain more than $1.2 billion in cryptocurrency stolen from Binance, advancing the government’s effort to recover assets from an October hack. The department said on November 12 that the amount is part of more than $2.7 billion frozen through joint government and private-sector efforts.

The Justice Department’s announcement describes the funds as stolen from Binance on or about October 29 by North Korean actors the FBI calls TraderTraitor. It says more than $6 billion in virtual assets were taken. The FBI has previously attributed the theft to the group.

What changes when crypto is frozen and a court authorizes seizure?

First, investigators trace stolen tokens as they move between blockchain addresses. Exchanges and other virtual asset service providers can help stop transactions or freeze assets they hold or control. The Justice Department says those joint efforts have frozen more than $2.7 billion so far.

Next, court authorization gives the government legal power to seize or restrain a portion of those assets. “Restrain” means keeping property from being moved while the legal process continues; the department’s release does not say how the authorized amount is split between seizure and restraint. The Associated Press report notes that the government typically files a forfeiture claim, after which a judge determines who has a legitimate claim to recovered funds.

The steps resemble placing a hold on disputed property before deciding who is entitled to it. Here, the moving parts are blockchain addresses, service providers that can freeze assets, and court orders governing what the government may do next. The announcement does not say that the full $1.2 billion has been transferred to the government or returned to Binance.

Who is affected by the recovery effort?

Binance is the exchange from which the assets were stolen. The department says North Korean actors continue to launder some of the funds through cryptocurrency bridges, mixers and exchanges. Those services can move assets between networks or make the trail harder to follow, while providers may be asked to block transactions linked to the stolen funds.

The FBI is coordinating recovery work with the U.S. Secret Service and the IRS Criminal Investigation division, according to the Justice Department. The effort depends on tracing the assets and on platforms or providers acting when they encounter funds linked to the theft.

What remains unresolved?

The $1.2 billion is a portion of funds already included in the larger frozen total. The Justice Department says efforts to trace, freeze, seize and forfeit the stolen assets are ongoing. Its announcement does not identify the court, list the assets covered by the authorization, or set out a timetable for forfeiture. Those steps will determine what can ultimately be recovered and who can claim it.

Sources and documents

• Justice Department’s announcement — justice.gov
• Associated Press report — apnews.com