Among many claimed benefits, cryptocurrencies supposedly offer two significant benefits over fiat currencies: 1) autonomy and 2) discretion. This past week, the U.S. federal government took them both down.
The U.S. Department of Justice issued a press statement that it had seized $2.3 million in cryptocurrency. The seizure was the result of the FBI’s Colonial Pipeline investigation. As a reminder, Colonial Pipeline, the U.S.’s largest pipeline for refined oil products, was the victim of a cyberattack. Against the U.S.’s wishes and policies, Colonial Pipeline paid millions in ransom to retake control of the pipeline.
According to the FBI, they had found and recaptured a majority of the ransom paid by Colonial. The FBI tracked the Bitcoin Colonial sent to the attackers recorded on the Bitcoin ledger utilizing a block explorer. The fact that the FBI was able to track and recover the cryptocurrency undermines these concepts of autonomy and discretion. If Bitcoin doesn’t offer these benefits, then where is the actual value above fiat currencies? The trading price of Bitcoin has tumbled since this news broke. Have investors started to ask these same questions?
Russian hackers continue to hack U.S. companies. Next, will be government entities, maybe even our military arsenal. This should raise flags about our outdated infrastructure. This is urgent, and we need to protect U.S. infrastructure by any means necessary.
I, like most Americans who are rational thinkers, was concerned reading the details of what the FBI has supposedly accomplished in response to the Colonial Pipeline ransomware attack. The FBI shared how they accessed DarkSide and operate on the dark web. In so doing, they released shockingly sensitive data, which surprised me. The dark web is the ugly part of the internet. If the press release is to be believed, the first question that comes to mind is why the U.S. government would release such details about what they did and how they did it. If the Colonial Pipeline actions are all true, and the law enforcement wraps up and arrests and penetrates Anom devices, this unique access and capability are gone today. The question then becomes why the U.S. government would expose so much sensitive access, tools and capability.
The reputation, confidence and public trust in the FBI were ruptured early in the Trump administration and are likely unrecoverable. So, is this press release true? This smells of a government public relations effort to repair the reputation of a fatally tarnished department. This press release would have landed entirely differently if it had occurred before and prevented the Colonial Pipeline hack. Crime prevention? That’s a funny phrase we don’t hear much anymore. Crime in almost every corner of American metropolitan areas is skyrocketing, and, just thinking aloud, while cryptocurrency is the new thing that everyone is raving about, it’s not beyond reproach, as clearly indicated by the FBI.
U.S. government hackers digitally pickpocketed DarkSide, the possibly Russian “ransomware as a service” provider that targeted Colonial Pipeline last month. They accessed a private key for one of DarkSide’s Bitcoin wallets and seized 63.7 Bitcoins ($2.1 million today) from it — 85% of the 75 Bitcoins in ransom Colonial Pipeline paid to DarkSide (then worth $4.4 million, now worth $2.5 million). However, this is just a tiny fraction of the $90 million in total ransoms DarkSide is thought to have collected before it shut down.
Bitcoin prices are down about 10% after former president Donald Trump called it a “scam” and because the DarkSide seizure raised concerns that cryptowallets are hackable. (It’s worth pointing out that DarkSide’s wallet wasn’t actually hacked in this case. Instead, government operatives gained access to its private key and used that key to unlock the wallet as normal.)
Separately, the FBI worked with Australian law enforcement to close a massive sting operation called Operation Trojan Shield, which exploited messages sent on encrypted Anom devices. The operation netted over 800 suspects across 16 countries and seized eight tons of cocaine and $48 million.
Armstrong Williams is a nationally syndicated columnist.