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The recovery of Colonial Pipeline’s ransom payment is a major moment for cryptocurrency

The recovery of Colonial Pipeline’s ransom payment is a major moment for cryptocurrency



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9 Comments

  1. “Eventually, the funds landed in an account that a federal judge allowed the F.B.I. to break into. According to court documents, officials got the account’s “private key,” a crucial password that gives the owner complete control over the funds inside.”

    I’m more interested in this than anything.

  2. For those behind a paywall:

    The Justice Department said on Monday that it had traced and seized much of the ransom that a major U.S. pipeline operator paid to a Russian hacking collective last month. The ransomware attack shut down the Colonial Pipeline for about a week, prompting fuel shortages and price spikes, until the company paid hackers more than $4 million worth of Bitcoin. But federal officials said that a new F.B.I. task force had recaptured most of the Bitcoins by, in essence, hacking the hackers.

    Bitcoin transactions are anonymous but not untraceable. The hackers moved the ransom through dozens of accounts, which can be tracked on the blockchain, the public ledger of all Bitcoin transactions. Eventually, the funds landed in an account that a federal judge allowed the F.B.I. to break into. According to court documents, officials got the account’s “private key,” a crucial password that gives the owner complete control over the funds inside.

    Tom Robinson of the blockchain analytics company Elliptic, who has been tracking the ransom payments, wrote in a blog post that the account compromised by the authorities appeared to hold the 85 percent share of the ransom that went to the client of DarkSide, the Russian “ransomware as a service” hacking group whose software was behind the attack. The remaining 15 percent was funneled through accounts presumably controlled by DarkSide developers.

    In a way, this could be good for cryptocurrency, the DealBook newsletter reports. A major criticism of crypto is that its anonymity and ease of use make it suitable for crime, like the ransomware attacks that, by some measures, strike every eight minutes. The Justice Department didn’t divulge how it had seized the bulk of the Colonial ransom, but its success shows that it can comb the blockchain and crack into at least some accounts. That’s good for the traceability of cryptocurrency used for crime — but also goes against the decentralized, privacy-focused, anti-establishment benefits that some see as crypto’s greatest assets. (There are other cryptocurrencies with features that make them harder to trace than Bitcoin.)

    Federal officials encouraged companies to work with the F.B.I. when attacked, as Colonial did, to help recoup ransom payments, which are thought to run into the billions of dollars (and are legal and even tax-deductible).

  3. Companies should be afraid of crypto, cuz it brings transparency. Can’t wire money from dictators for black market arms deals via shell corporations anymore, flow of values is public. This anonymity tag is irritating.

  4. If this is what actually happened it may be a reason for the pull back yesterday. If a government can seize accounts and refund coins they are obviously not as secure as people thought. Its just a theory so take it with a grain of salt.

What do you think?

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