Federal Custody Compromised
The U.S. Marshals Service (USMS) has launched an investigation into the theft of approximately $40 million in seized cryptocurrency, following allegations that the son of a government contractor abused insider access to drain the funds. The investigation, triggered by findings from on-chain sleuth ZachXBT, centers on John Daghita, the son of the president of Command Services & Support (CMDSS), a firm hired by the USMS in 2024 to manage complex digital assets.
The breach involves funds seized from the 2016 Bitfinex hack. According to The Block, approximately $24.9 million was siphoned from a government-controlled wallet in March 2024. ZachXBT linked these transfers to wallets controlled by Daghita, noting that total illicit flows connected to the suspect could exceed $90 million.
Bitcoin (BTC) shrugged off the news, trading up 1.2% at $89,033, while Ethereum (ETH) hovered around $2,947.
The Telegram Flex that Backfired
The scheme unraveled due to a “band-for-band” dispute, a wealth-flexing contest, in a private Telegram group. Daghita allegedly screen-shared an Exodus wallet containing millions in illicit funds to prove his liquidity. This operational security failure allowed ZachXBT to trace the assets back to the USMS seizure wallets.
“Meet the threat actor John (Lick), who was caught flexing $23M in a wallet address directly tied to $90M+ in suspected thefts from the US Government.” ZachXBT
Outsourced Risk
This incident exposes a critical vulnerability in how the federal government handles seized crypto. While the USMS partners with Coinbase for “Class 1” (liquid) assets, it outsources the custody of “Class 2-4” assets, tokens that are harder to sell or manage, to smaller contractors like CMDSS. The alleged involvement of a contractor’s family member suggests a failure in internal controls for these high-risk, lower-liquidity assets.
The USMS confirmed the active probe to CoinTelegraph but declined to comment on specific suspects. CMDSS’s digital footprint, including its website and social media, has since gone offline. No formal charges have been filed as of Tuesday.
