The price of bitcoin was been sent tumbling this week, as news of the FBI successfully recovering bitcoin funds stemming from the Colonial Pipeline hack has sparked fear among cryptocurrency proponents that the world’s most secure form of payment… may not be so secure after all.
On Tuesday, the US Justice Department announced that the FBI successfully seized $2.3 million in bitcoin from DarkSide hackers responsible for the Colonial Pipeline cyber attack, which devastated fuel supplies across the US east coast. A day after the attack, Colonial paid the hackers 75 bitcoin, but it still took the pipeline nearly a week to fully recover its infrastructure. Of that payment, 63.7 bitcoin were recovered.
This marks a significant milestone for the DOJ as well as for America’s vital infrastructure; however, the event was also pivotal in the digital currency market. The operation was carried out by the newly formed Digital Extortion Task Force, which supposedly gained access to the private encryption key for the hacker’s bitcoin wallets. It still remains unclear how exactly the federal task force got the key.
Some reports have suggested the FBI was granted access to the hackers’s email via a warrant, and found the passcode. However, the bigger fear is that the feds may have gotten assistance from bitcoin, or the currency exchange that held the funds— either through a subpoena or cooperation. Or, it is also possible that the FBI hacked the hackers.
Whatever the method may have been, one thing is certain: with the FBI successfully recovering the bitcoin, investors are now more spooked than ever— as it the currency’s security is not so foolproof after all.
Information for this briefing was found via the DOJ. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.