Crypto tumbles after US tracks Bitcoin ransom paid to hackers
Colonial Pipeline paid a $4.4 million (more than R59m) ransom on 7 May to the cyber criminals that took it offline.
The pipeline operator said at the time it carries 45% of the US East Coast's supply of diesel, petrol and jet fuel.
The hackers had encrypted Colonial's files and demanded the ransom be paid in Bitcoin.
They were identified as a Russia-based group called DarkSide.
The US Department of Justice has announced that its investigators managed to retrieve more than $2 million in cryptocurrency payments made by Colonial Pipeline.
Bruce Whitfield finds out what makes this kind of tracking possible from Farzam Ehsani, co-Founder and CEO of VALR.com.
An advantage of Bitcoin is that every single transaction ever made is actually visible on the public Bitcoin blockchain, says Ehsani.
Obviously, transactions take place between addresses. You can think of these addresses as strings of letters and numbers, so you don't necessarily know who is behind a particular address... but there is a record of every single transaction.Farzam Ehsani, Co-founder and CEO - VALR.com.
When regulators see that Bitcoin has been used to propagate illicit activity, they very often look to public blockchain... as you and I can... and they try to trace the flows of those coins.Farzam Ehsani, Co-founder and CEO - VALR.com.
There are more and more sophisticated tools that help law enforcement agencies as well as the exchangers like ourselves to make sure that we can understand, if someone leaves a little bit of a trail somewhere, that you can actually pick up what address belongs to which party if there's enough information that's left behind.Farzam Ehsani, Co-founder and CEO - VALR.com.
Some of the other cryptocurrencies are more difficult to trace at this point.
Ehsani also highlights the language used to describe that the ransom Bitcoins were "seized".
They say that they are in possession of 'a private key' for the Bitcoins under discussion.Farzam Ehsani, Co-founder and CEO - VALR.com.
Think about it like a P.O. box number for all to see... but the 'private key' is the actual key of the person that owns the P.O. box... to access what's inside the box.Farzam Ehsani, Co-founder and CEO - VALR.com.
The FBI said they are in possession of that private key and have therefore re-cloned the Bitcoin that was paid for that ransom.Farzam Ehsani, Co-founder and CEO - VALR.com.
Listen to Ehsani's explanation on The Money Show:
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