This is a part of the ransom of up to $ 4.4 million that a hacker group called DarkSide demanded from oil pipeline supplier Colonial Pipeline. The attack crippled the company’s information technology systems last month.
The announcement from the US Department of Justice homepage said that the FBI had obtained the password to seize the Bitcoin wallet held by the DarkSide group. Although it did not specify how to get the password, immediately the information that the FBI cracked the Bitcoin wallet made investors bewildered. So what is the truth?
How the FBI seizes Bitcoin
“I don’t want to give up our tradecraft in case we want to use this again for future endeavors,” said Elvis Chan, special assistant at the FBI’s San Francisco office.
To get Bitcoin in someone else’s wallet, according to experts, there are only a few possible scenarios.
First, the DarkSide hacker group uses a payment channel to withdraw this ransom. Such a channel could be easily traced by the FBI.
But once the FBI had tracked down the wallet, it was still very difficult for them to pull out because an algorithm helps ensure that the Bitcoins can only be spent by the owner who holds the private key that matches the public key on the blockchain network.
This key is like two halves of a broken coin and it can only match the other half.
Therefore, according to experts, it is possible that the hacker group carelessly stored the private key on a server that the FBI can track, thereby opening the wallet to get Bitcoin.
Like the hack of the Mt. Gox in 2014, hackers stole 750,000 Bitcoins from users without being able to trace them.
“Bitcoin itself functioned perfectly, but what functioned imperfectly was their system of storing your private keys,” said Nic Carter of Castle Island Ventures.
“If you want to store your coins truly outside of the reach of the state, you can just hold those private keys directly. That’s the equivalent of burying a bar of gold in your backyard,” said Carter.
The fact that the FBI quickly seized the Bitcoins in this extortion case is a good sign, according to experts.
“It proves that the bitcoin blockchain is not hostile ground for law enforcement. It proves that it is not a perfect tool for criminal activity,” commented Chris Giancarlo, former Chairman of the Commodity Futures Trading Commission.
“Many market participants, myself included, were expecting President Joe Biden to use crypto as a scapegoat for the hack and to come out with crushing reforms. Instead, they were clued into what we already knew: That it is easier for authorities to catch criminals who use crypto than anything else,” said Mati Greenspan of Quantum Economics.
Despite the conspiracy theories that surround it, there is no data to show that criminals use virtual currency to launder real money more than in other ways. A report by market research firm Chainalysis shows that less than 1% of virtual currencies are used for illegal purposes.