The US Justice department on Monday said that it has recovered most of the ransom paid to the hacker group Darkside. It said the FBI tracked down the ransom payment that Colonial Pipeline made to the hacker group DarkSide in May.
The FBI seized control of DarkSide’s proceeds by gaining access to a central account holding about 63.7 bitcoins, worth around $2.3 million, Deputy Director Paul Abbate said.
The FBI was able to access the “private key,” or password, for one of the gang’s bitcoin wallets and swooped in after a judge gave it the go-ahead. However, it did not say how the FBI came to know the key, which is effectively a password to the storage facility.
This recovery by the FBI raises a question on just how decentralized and free from government control that Bitcoin really is, as have long been argued by its fans.
Analysts said the dramatic move raised questions about just how free from state oversight Bitcoin really is.
“The rapid move by US agents in tracing and tracking the ransom paid, then retrieving it after gaining access to a private key to unlock the bitcoin wallet, is a blow to crypto fans who have lauded its untraceable nature,” said Susannah Streeter, senior investment analyst at broker Hargreaves Lansdown according to Business Insider.
“One of bitcoin’s most lauded qualities – its decentralized nature, away from the scope of government interference – is now under question.”
Edward Moya, senior market analyst at currency firm Oanda, said: “If the government can control servers and easily track where the money is going, bitcoin might not be as independent from big government as many have initially thought.”
Bitcoin fell to its lowest point in over a week on Tuesday, with analysts pointing to the FBI’s move as a key factor while some points to China crackdown over the weekend and Donald Trump’s interview on Monday.
“A portion of the people that use bitcoin are bad players, and some must have got nervous after hearing about the ransom recovery,” Moya said.
However, a crypto analysts said that the Bitcoin networked was not hacked, that the FBI used a key already in its possession.
“This seizure does not make bitcoin any less secure or decentralized, as the Justice Department was able to access the stolen funds with the private key that was already in their possession,” said Bobby Ong, cofounder of crypto data website Coingecko.
Some argue that increased oversight will make bitcoin more appealing. Anthony Scaramucci, the founder of investment fund SkyBridge, in a tweet argued that Bitcoin will be more appealing with more over sight. He tweeted: “Bitcoin transactions are anonymous but not untraceable. This will make the asset more and more acceptable once people understand this.”
Bitcoin transactions are anonymous but not untraceable.
This will make the asset more and more acceptable once people understand this.
— Anthony Scaramucci (@Scaramucci) June 8, 2021
Kit Juckes, macro strategist at Societe Generale, said the episode showed the power states have over the financial system. “I’ve always really assumed that, in the end, governments can win,” he said.
Ifunanya Ikueze is an Engineer, Safety Professional, Writer, Investor, Entrepreneur and Educator.