The price of bitcoin is again free falling by more than 10%, and it is majorly due to the FUD spread by mainstream media regarding the Colonial Pipeline hack. The fear and greed index is showing extreme fear in the markets, and people are once again panicking all over the place. Many media outlets misrepresented the ransomware incident, highlighting it was a bitcoin wallet that was hacked. The FBI did not hack bitcoin wallets to recoup the funds; instead- they were tracking the money using the public ledger.
The US-based fuel pipeline system had to freeze its operations, as the company fell prey to a ransomware attack done by a Russian hacking group- DarkSide. The fuel shortage also created a huge problem for the company, so they went ahead and paid $4.4 million in ransom, which at that time accounts for 75 bitcoin.
Yesterday, the DOJ extortion task force announced that they recouped $2.3 million of the entire ransom, but it created tension between the government officials and the cryptocurrency payment system.
“The misuse of cryptocurrency is a massive enabler here- 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”, said Deputy National Security Advisor Anne Neuberger.
The US government feels that cryptocurrency mixing services can pose a huge problem, as they can obscure the trail back to the original source.
The claims made in the DOJ statement are slightly misleading, as it says the FBI obtained private keys of the bitcoin wallet that contains approximately 63.7 bitcoin. However, after looking at the warrant-to-seize document, we understand that the FBI took legal action against an exchange (coinbase), which had servers in North California.
Some sources also bring about a theory that tells us the FBI secured funds by IDing the perps and demanded the hackers to send back the stolen funds to an FBI-controlled address. Although many theories may not pan out the way we think, one thing is for sure- the FBI did not and cannot hack BTC keys.
Bitcoin is a safe haven digital asset that currently runs on an unbreakable cryptographic formula known as an Elliptic Curve Digital Signature Algorithm. So it is pretty much impossible to break in and gain access to the wallet. The only thing that can even come close to hacking a bitcoin wallet is quantum computing, which is still only theoretically proven.
The government security officials tried to give an impression that bitcoin’s security is still a question mark, and the mainstream media used the same narrative to drive more FUD.
Adam Back, the inventor of Hashcash and operating CEO of Blockstream, took it to his Twitter and gave more reasoning to this issue. He also believes that the FBI got control over the server by issuing a subpoena.
It is still tough to believe that a hacking group capable enough to take down one entire company’s infrastructure could not maintain safe custody of their bitcoin. We will soon have more info from the government on how they recouped the money, but it is ruled out that bitcoin wallets can be hacked. The FBI succeeded in recouping this amount of money because bitcoin has a public ledger, so they followed the money and took control of the custodian server.
That is why you need to steer clear of the narratives coming from the Colonial Pipeline drama. The company failed to incorporate proper security measures and has nothing to do with the bitcoin network. The seven layers of security serve as the foundation of bitcoin. That makes it the greatest digital asset, so never forget such fundamentals and avoid the FUD coming your way.
Born and brought up in India, Karthikeya Gutta is a crypto journalist and freelance contributor for ItsBlockchain. He covers various aspects of the industry with in-depth analysis and research. His passion towards blockchain and crypto ecosystem is mainly because he believes it can really change the world and help millions of people.
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