The FBI's breach of a bitcoin wallet held by the cyber criminals who attacked Colonial Pipeline is probably about sloppy storage, crypto experts told CNBC.
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The FBI’s breach of a bitcoin wallet held by the cyber criminals who attacked Colonial Pipeline is all about sloppy storage, and not a reflection of a security vulnerability in the digital currency, crypto experts told CNBC.
On Monday, the Justice Department reported a successful mission to retrieve
$2.3 million in bitcoin paid by Colonial Pipeline to ransomware hackers in April. Court documents indicated that investigators traced bitcoin transaction records to a digital wallet, which they subsequently seized under court order. Officials were then able to access that wallet with something called a “private key,” or password。
It remains unclear how exactly the FBI retrieved the key.
Once the FBI had that wallet in hand, it’s extremely unlikely they broke something called the “Elliptic Curve Digital Signature Algorithm,” which is how the digital currency ensures that bitcoin can only be spent by the rightful owner.
“In fact, that is so far-fetched, as to be impossible,” said Nic Carter, founding partner at Castle Island Ventures.
What’s much more likely, according to Carter, is that they were able to access a server where the hackers stored private key information. That points not to any fundamental flaw in bitcoin’s security, but rather a case of bad IT hygiene for a criminal organization.