HomeBitcoin NewsFBI Halts Bitcoin Ransomware Attack on Colonial Pipeline

FBI Halts Bitcoin Ransomware Attack on Colonial Pipeline

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Not long ago, agents with the Federal Bureau of Investigation (FBI) managed to intercept bitcoin funds stolen through a ransomware attack on the Colonial Pipeline. The move resulted in a heavy blow to BTC, which experienced another massive dip over the weekend.

How the FBI Got in the Way of a BTC Payment

The FBI has now emerged with more details regarding the interception. The federal agency states that they were not able to find any security issues with the bitcoin units themselves. Rather, they were able to stop the transaction in its tracks simply because the hackers were utilizing “sloppy storage.”

At the time of writing, it is unclear how the FBI was able to engage in such a swift move. The agency does not want to divulge its secrets but has informed the public that approximately $2.3 million paid by the Colonial Pipeline has been recovered in the past week. Elvis Chan – assistant special agent with the FBI San Francisco office – explained in a recent interview:

I do not want to give up our tradecraft in case we want to use this again for future endeavors.

It appears the money was destined for a cyber gang known as Dark Side. The organization allegedly made a big mistake in that it used a payment server to collect the ransom, which the FBI assures is relatively easy to follow. Deputy Attorney General Lisa O. Monaco explained in a statement:

Following the money remains one of the most basic, yet powerful tools we have.

Jesse Spiro – global head of policy at blockchain analysis firm Chainalysis – also offered commentary regarding the ease of the situation, mentioning:

Because transnational organized criminal groups are facilitating these payments in cryptocurrency, and because of the transparency and traceability that cryptocurrency provides, you can actually more effectively follow the money and potentially mitigate and arrest illicit activity within this ecosystem than you can with traditional finance and fiat currencies and payments.

Poor Storage Tactics to Blame?

With so few details available, however, some were left to speculate regarding how the FBI was able to engage in such a quick retraction of the funds. Nic Carter – founding partner at Castle Ventures – believes that the agency was likely able to infiltrate a server that stored data pertaining to private keys for the crypto wallet holding the money, and that the criminal organization in question simply did not have the appropriate security measures in place:

Bitcoin itself functioned perfectly, but what functioned imperfectly was their system of storing your private keys… If you want to store your coins truly outside of the reach of the state, you can just hold those private keys directly. That is the equivalent of burying a bar of gold in your backyard.

At the time of writing, bitcoin has risen to about $35,000 per unit – roughly $3,000 higher than where it stood mid-week.

Nick Marinoff
Nick Marinoffhttps://www.livebitcoinnews.com/
Nick Marinoff is currently a lead news writer and editor for Money & Tech, a San Francisco-based broadcasting station that reports on all things digital currency-related. He has also written for a number of other online and print publications including Black Impact Magazine, EKT Interactive, Seal Beach USA and Benzinga.com, to name a few. He has recently published his first e-book "Take a 'Loan' Off Your Shoulders: 14 Simple Tricks for Graduating Debt Free" now available on Amazon. He is excited about the potential digital currency offers, particularly its ability to finance unbanked populations and bring nations together financially.

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