Recovery of 63.7BTC By The U.S Gov't Triggered Crypto Security Concerns
How Secure is your wallet?
The FBI and the Justice Department stated on Monday that they had confiscated 63.7 bitcoins (worth roughly $2.3 million at the time) from a Bitcoin wallet believed to be held by cybercriminals linked to the DarkSide collective based in Russia.
The confiscated Bitcoin was paid as ransom during the attack against the Colonial Pipeline. The total paid ransom was said to be worth around $5 million in BTC.
The FBI refused to reveal how it gained access to the bitcoin wallet, claiming the necessity to preserve its tradecraft, but the mystery here is how the FBI was able to obtain the "private key" that was used to unlock and retrieve assets from the perpetrators' Bitcoin address In the world of cryptocurrencies, a private key is similar to a password and is carefully guarded, especially by groups dealing with huge sums of stolen funds. Experienced Bitcoin users usually don't connect their private keys to the internet at all, instead opting for a more secure method like cold wallets.
This raised many concerns about the security of Cryptocurrencies, though some analysts believe the FBI's ability to recover the bitcoin ransom was due to the criminals' storage of their private keys rather than a vulnerability in the cryptocurrency itself.
The FBI stated in an affidavit that it utilized a “blockchain explorer” to scan the public Bitcoin ledger to determine where the payments went and how the Bitcoin was moved from address to address among many transactions. The FBI was subsequently able to track down the monies, which finally arrived at one address on May 27 and stopped moving.
Private keys, or a string of letters and numbers that resembles a password, are used to get access to a cryptocurrency holder's funds. As a result, it's critical that your private keys remain hidden from the general public.
The information that the ransom may be seized by the long arm of the law rattled the cryptocurrency markets, with Bitcoin plunging below 10% on Tuesday. Some of the selloff was likely due to investor concerns about government control, as well as anxiety induced by the possibility that the FBI could track down and retrieve the assets.
To protect your cryptocurrency from hackers or other outside threats, it's critical to understand the many types of wallets available and how to safeguard your private keys.
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