U.S. Recovers Millions Paid In Bitcoin For Pipeline Ransomware

Reynaldo Marquez

Last Updated: June 11, 2024 1:56 pm

3 mins read

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U.S. authorities have successfully recovered a ransom paid in Bitcoin by the company Colonial Pipeline, per a CNN report. In May, a cyberattack allegedly perpetrated by a Russia-backed hacker group called DarkSide halted the operations of this company.

According to the report, Colonial Pipeline controls around 45% of the fuel for the U.S. East Coast. Its CEO Joseph Blount was forced to pay the ransom enforced by the hacker on a control room’s main computer. Estimated in around $4.4 million paid in 63.7 Bitcoin.

The operation was carried out by a special ransomware task force created by the U.S. Federal Government. This type of attack has become regular. There is a growing concern in the public and the authorities.

Deputy Attorney General Lisa Monaco said the following on the operation during a press conference:

By going after an entire ecosystem that fuels ransomware and digital currency, we will continue to use all of our tools and all of our resources to increase the costs and the consequences of ransomware attacks and other cyber-enabled attacks.

Deputy National Security Advisor Anne Neuberger claimed that Bitcoin and cryptocurrencies “enable” this type of crime. A similar position has been taken by other U.S. high-ranking government officials, such as Secretary of Treasury, Janet Yellen. Neuberger added, according to CNN:

That’s the way folks get the money out of it. On the rise of anonymity and enhancing cryptocurrencies, the rise of mixer services that essentially launder funds.

Another representative from the Department of Justice (DOJ) claimed that the funds were seized from a Bitcoin wallet.

Not Your Keys, Not Your Bitcoin Has Never Been More Truthful

However, members of the crypto community and specialize media seem unconvinced. Independent journalist Jordan Schachtel questioned the entire operation. He claims that “Russian hacking” has been used “illegitimately” many times in the past. Therefore, he hints at the possibility of the Federal Authorities withholding key information.

The independent journalist also pointed out some inconsistencies in the investigation. For example, the authorities claimed to have the hacker’s Bitcoin wallet password. He said:

Why do you need a court order if you have the password to their wallet? The reverse is also true. If the bitcoin was transferred to a custodial wallet, you dont need the password (keys).

Schachtel wonders how the authorities got the private key in the first place. The official report only states that the ransom was transferred to a “specific address, for which the FBI has the private key”. Available information appears to rule out the possibility of the Feds obtaining a BTC wallet private keys, the hackers might have utilized a centralized exchange as custodian of the ransom.

So it looks like I was right. The FBI did not obtain the private keys. Instead, they took legal action against an exchange or some kind of custodial wallet that has servers in N California (Coinbase, lol?). These “hackers” were grossly incompetent.

Preston Byrne, Partner at Anderson Kill Law, summarized the whole operation. Both the journalist and Byrne concluded that the U.S. didn’t do anything innovative.

https://twitter.com/prestonjbyrne/status/1401997421727686658

At the time of writing, BTC trades at $34,127. In the daily chart, the first cryptocurrency by market cap has been trending downwards after sideways movement in the past weeks.

Reynaldo Marquez

A literature major, Reynaldo Márquez has been deeply immersed in the crypto industry since 2017. His journey began with translating articles for various crypto news outlets, a role he took on with zeal. In 2018, amidst a challenging market, he embraced his first writing assignment, demonstrating his unwavering commitment to the nascent industry and the promise of change it bears for many people worldwide.
In March 2021, he joined the prestigious crypto news outlet NewsBTC and Bitcoinist, where he not only reported on the latest crypto news but also had the privilege of interviewing some of the industry's most influential figures. A year later, his dedication and hard work were recognized, and he was promoted to Managing Editor, a position he currently holds with pride.
He believes in honesty, good communication, hard work, and the power of cryptocurrency and its potential to transform people's lives, especially those alienated by the legacy financial system. Born in 1992 in Venezuela, Reynaldo is familiar with how governments and central banks can negatively affect people, their everyday lives, and their futures by creating inflation and erasing their hopes for a better future. Thus, like many Venezuelans, he embraced this new technology to help him and his family navigate difficult times.
In another life, Reynaldo would have pursued a career as an investigator, most likely tracking down the origins of the Cyberpunk movement with the publication of William Gibson’s ‘Neuromancer.’ The intersection between fiction and reality, with the materialization of Bitcoin in 2009, would have allowed him to dive deep into the crypto sphere as something more than a financial phenomenon but also a cultural shift in society that was brewing since the XX century, and maybe even sooner, in the XIX century with the publication of Henry David Thoreau’s ‘Civil Disobedience.’
But that’s for another life. In this one, Reynaldo has been trading to improve his trading skills. Since 2023, he has been trying to learn Python to create successful strategies and find ways to execute them. It is a difficult task, which continues to keep him busy today and will most likely continue to keep him busy in the near and long term.
In his free time, he enjoys lifting heavy objects, reading, watching movies, and listening to his favorite music. Some of his favorite authors are Walt Whitman, William Faulkner, Allen Ginsberg, James Baldwin, Raymond Carver, Ray Bradbury, George Orwell, Mario Vargas Llosa, Reinaldo Arenas, Rafael Cadenas, and many others. Lately, he has been primarily interested in reading about dystopic societies, a topic that deeply resonates with the crypto industry.
Since 2023, he has lived in Spain with his wife. He loves the weather, the food, and the people and their culture. They both expect to travel much more within the country they now call home and beyond its border. He hopes to retire with his wife, maybe in a quiet place near a beach, but most likely in a city close to a library and a university with his kids and, hopefully, grandkids.

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