Bitcoin Is Actually Traceable, Pipeline Investigation Shows

Bitcoin is not as hard to track as cybercriminals think, The New York Times is reporting.

The newspaper pointed to the Justice Department announcement that it had traced 63.7 of the 75 Bitcoins — about $2.3 million of the $4.3 million — that Colonial Pipeline had paid out as a result of the recent ransomware attack

It was the first seizure of a paid ransom by the Justice Department’s new Ransomware and Digital Extortion Task Force, tasked to go after the so-called “ransomware as a service” industry that has extracted hundreds of millions of dollars from targets like schools, hospitals, local governments, and businesses over the past several years.

The Times reported that officials have declined to provide additional details on exactly how they recouped the Bitcoin.

But the newspaper noted federal investigators were able to track the ransom through at least 23 different electronic accounts belonging to the criminal cybergroup known as DarkSide.

Bitcoin can be created, moved, and stored outside the purview of any government or financial institution. However, each payment is recorded in a permanent fixed ledger, called the blockchain, according to the Times.

And all Bitcoin transactions can be viewed in the ledger by anyone who is plugged into the blockchain.

“It is digital bread crumbs,” said Kathryn Haun, a former federal prosecutor. “There’s a trail law enforcement can follow rather nicely.”

Haun said that the speed of the Justice Department’s seizure of the ransom was “groundbreaking” because the hackers’ used cryptocurrency.

But experts said law enforcement first needed to determine how to connect the criminals to the digital wallet, which stores the Bitcoin. And those experts noted authorities likely had to focus on what is known as a “public key” and a “private key.”

The Times explained that a “public key” is the string of numbers and letters that Bitcoin holders have for transacting with others. A “private key” is used to keep a wallet secure.

It was not known how federal agents obtained DarkSide’s “private key.”

“The public is slowly being shown, in case after case, that Bitcoin is good for law enforcement and bad for crime — the opposite of what many historically believed,” said Hunter Horsley, chief executive of Bitwise Asset Management, a cryptocurrency investment company.

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