when Bitcoin rushes into the scene In 2009, fans foretold cryptocurrencies as a secure, decentralized and anonymous way to execute transactions outside the traditional financial system.
Criminals operating in the hidden territory of the Internet often flocked to Bitcoin to do illegal business without revealing their name or location. Digital currencies, like the contrarian libertarians, quickly became popular among drug dealers and tax evaders.
But this week’s revelation Federal authorities have collected most of Bitcoin’s ransom What was paid in recent Colonial Pipeline ransomware attacks revealed a fundamental misconception about cryptocurrencies: they are not as hard to track as cybercriminals think.
On Monday, the Justice Department announced that it had tracked $ 63.7 out of 75 Bitcoin (about $ 2.3 million out of $ 4.3 million). Colonial pipeline Ransomware attack shuts down company computer system, fuel shortage Soaring gasoline pricesSince then, authorities have refused to provide details on how accurately Bitcoin, whose value has fluctuated, has been recovered.
But for a growing community of crypto enthusiasts and investors, the fact that federal agents were tracking ransoms passed through at least 23 different electronic accounts belonging to it. Dark side, Hacking groups have shown that law enforcement is growing with the industry before accessing one account.
This allows law enforcement agencies to take advantage of the same characteristics that make cryptocurrencies attractive to cybercriminals: the ability to send money instantly without the permission of a bank to fund criminals at the speed of the Internet. Because it can be tracked and seized.
Bitcoin can also be tracked. Digital currencies can be created, moved, and stored outside the authority of governments and financial institutions, but each payment is recorded in a permanent fixed ledger called. Blockchain..
This means that all Bitcoin transactions are open to the public. The Bitcoin ledger can be viewed by anyone connected to the blockchain.
“This is digital bread crumbs,” said Catherine Haun, a former federal prosecutor and investor at venture capital firm Andreessen Horowitz. “There is a way law enforcement can follow pretty well.”
Haun added that the speed at which the Justice Department seized most of the ransom was “breakthrough” due to the use of cryptocurrencies by hackers. In contrast, obtaining records from banks often takes months or years to navigate paperwork and bureaucracy, especially if those banks are abroad.
Given the public nature of ledgers, cryptocurrency experts said law enforcement had only to find a way to connect criminals to a digital wallet that stores Bitcoin. To do so, authorities have probably focused on what is known as “public keys” and “private keys.”
The public key is a string of numbers and letters that Bitcoin holders have to trade with others, and the “private key” is used to keep the wallet secure. According to the authorities, tracking a user’s transaction history was to understand which public key the user manages.
To seize an asset, you had to get a private key, which is even more difficult. It’s unclear how federal agents were able to obtain the Dark Side’s private key.
Justice ministry spokesman Marc Raimondi refused to talk further about how the FBI seized Dark Side’s private key. According to court documents, the investigator accessed one password in the hacker’s Bitcoin wallet, but did not elaborate on how to do it.
According to cryptocurrency experts, the FBI did not appear to rely on the underlying vulnerabilities of blockchain technology. The likely culprit was a good old police job.
Federal agents can spy on humans within the Dark Side network, hack computers that store private keys and passwords, or hand them over to services that hold secret purses by search warrants or other means. So, it is possible that the private key on the dark side was confiscated.
“If they can get the key, it can be confiscated,” said Jesse Proudman, founder of. Makara, Cryptocurrency investment site. “Just putting it on the blockchain does not escape that fact.”
The FBI has partnered with several companies that specialize in tracking cryptocurrencies across digital accounts, according to authorities, court documents, and companies. As law enforcement agencies and banks try to stay ahead of financial crimes, start-ups such as TRM Labs, Elliptic, and Chainalysis have blossomed to track cryptocurrency payments and flag potential criminal activity.
Their technology tracks blockchain looking for patterns that suggest illegal activity. This is similar to how Google and Microsoft tame email spam by identifying and blocking accounts that spray email links on hundreds of accounts.
“Cryptocurrencies allow us to use these tools to track funds and financial flows along the blockchain in ways that cash cannot,” said TRM Labs, a blockchain intelligence company that sells analytics software. Said Ari Redbord, Head of Legal Affairs. For law enforcement agencies and banks. He was previously a senior advisor to financial information and terrorism at the Treasury Department.
Some long-time crypto enthusiasts have said that much of Bitcoin’s ransom recovery is a victory in the legitimacy of digital currencies. They said it would help change the image of Bitcoin as a playground for criminals.
“Bitcoin is good for law enforcement and bad for crime, which is the opposite of what many have historically believed.” Bitwise Asset Management, Cryptocurrency investment company.
Cryptocurrencies have become more and more mainstream in recent months. Companies such as PayPal and Square are expanding their cryptocurrency services. Coinbase, a startup that allows people to buy and sell cryptocurrencies, Published in April Currently worth $ 47 billion. On the weekend, Bitcoin conference More than 12,000 attendees gathered in Miami, including Twitter CEO Jack Dorsey and former boxer Floyd Mayweather Jr.
As more people use Bitcoin, most people are accessing digital currencies in a way that reflects traditional banks through central intermediaries like cryptocurrencies. In the United States, anti-money laundering and identification laws require such services to know who their customers are and create a link between their identity and their account. Customers are required to upload government ID when signing up.
The ransomware attack put an unregulated crypto exchange under the microscope. Cybercriminals are flocking to thousands of high-risk criminals in Eastern Europe who do not comply with these laws.
After the Colonial Pipeline attack, some financial leaders have proposed a ban on cryptocurrencies.
“We can live in a world with cryptocurrencies and a world without ransomware, but we can’t have both,” said Lee Reiners, Executive Director of the Global Financial Markets Center at Duke University Law School. I will. Written in The Wall Street Journal.
Cryptocurrency experts said hackers may have tried to make Bitcoin accounts even more secure. Some cryptocurrency holders Save the private key In a so-called “cold wallet” away from what is connected to the internet. Some people remember strings of numbers and letters. Others write them down on paper, but they can be obtained by search warrants or police work.
“The only way to get the truly irretrievable properties of an asset class is to remember the key and not write it down anywhere,” says Proudman.
The Justice Department’s Raimondi said the ransom seizure of the Colonial Pipeline was the latest sting operation by federal prosecutors to recover illegally acquired cryptocurrencies. The agency said it had “many seized for hundreds of millions of dollars from unhosted cryptocurrency wallets” used for criminal activity.
In January, the Justice Department confused another ransomware group. NetWalker, Using ransomware to extort money from municipalities, hospitals, law enforcement agencies and schools.
As part of that stab wound, the department acquired about $ 500,000 in NetWalker’s cryptocurrency collected from ransomware victims.
“We believe these individuals operate anonymously in the digital space, but we have the skills and tenacity to identify and prosecute these actors and seize criminal proceeds throughout the law. “The then US federal prosecutor Maria Chapa Lopez Florida district said when the case was announced.
In February, the Justice Department said there was a warrant to seize nearly $ 2 million in cryptocurrencies on two different crypto exchanges stolen by North Korean hackers.
Last August, the ministry also opened a complaint from a North Korean hacker who stole $ 28.7 million in cryptocurrency from a cryptocurrency exchange and laundered revenue through China’s cryptocurrency laundering service. The FBI tracked funds to 280 crypto wallets and their owners.
After all, “cryptocurrencies are actually more transparent than most other forms of value transfer,” said Madeleine Kennedy, a spokeswoman for Chainalysis, a startup that tracks cryptocurrency payments. “It’s certainly more transparent than cash.”
Bitcoin is actually traceable, pipeline survey shows
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