U.S. Crypto Holdings Hit by $40M Alleged Insider Theft

A recent investigation revealed a potential insider theft of cryptocurrency from U.S. government wallets, with an estimated $25 million allegedly diverted.

John Daghita, known online as “Lick” and the son of CMDSS CEO Dean Daghita, is accused of siphoning the funds. Transfers reportedly trace back to coins seized after the 2016 Bitfinex hack.

Blockchain analyst ZachXBT reported tracking $24.9 million to government-controlled wallets. While most funds were returned, roughly $700,000 remains unaccounted for.

During a live online dispute known as a “band-for-band” fight, Daghita allegedly displayed wallets showing large holdings in Tron and Ethereum. The case underscores ongoing risks in government-managed crypto custody.

Also Read: UK FCA Nears Final Consultation on Crypto Regulation in 2026

CMDSS Contract Under Scrutiny

CMDSS, nestled in Haymarket, Virginia, won a contract worth $40 million in October 2024 to manage “Class 2-4” confiscated cryptocurrencies, which are the type of coins that are not usually listed on popular exchanges.

This was despite competition from other firms, such as Wave Digital Assets, which contested the award at the Government Accountability Office (GAO), citing CMDSS’s lack of SEC and FINRA licenses.

The GAO rejected Wave’s protest, finding the Marshals Service’s evaluation to be in order. However, those who oppose the current procurement system argue that this particular case highlights the problems with government procurement, including the emphasis on being a smooth bidder rather than having good cybersecurity expertise.

It has been observed that even large amounts of money may not be able to guarantee the security of assets if the internal controls and audits are not up to the required standard.

Lessons in Oversight and Security

According to reports in February 2025, it was evident that the U.S. Marshals Service heavily relied on spreadsheets to track digital assets, still struggling with a sound estimation of the total amount of bitcoin in its custody.

Gaps in oversight, combined with a lack of in-depth knowledge of digital asset security, created an opportunity for exploitation.

As experts warn, managing the crypto assets of the government requires specific knowledge, strict internal controls, and real-time auditing.

The case of Daghita, as much as it has not been adjudicated yet, highlights how experience always overcomes the need to tick the right boxes. Without improved transparency and auditing, government wallets remain vulnerable to insider threats.

Why This Matters

The theft of cryptocurrency by alleged insiders has highlighted the weaknesses in the U.S. government’s cryptocurrency storage, proving that even large contracts are not enough to ensure security.

A lack of oversight and technical knowledge has made this a constant problem, and it is essential to have audits and cryptocurrency management expertise.

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