When it was announced recently that the FBI had recovered more than 80% of the ransom paid in Bitcoin, security-related concerns abounded, and many feared that somehow the FBI had actually found a way to hack the network. However, three cryptography experts have explained that these security fears are groundless.
A rumour that the FBI had managed to hack the Bitcoin network and take back possession of $4.4 million Bitcoin that was paid as a ransom over the Colonial Pipeline attack sent the Bitcoin price spiralling, many believing that the government had found a way to hack the wallet containing the Bitcoin.
However, many experts pushed back on this theory, saying that it was absolutely groundless. A recently published article on Business Insider, put forward the views of three of these experts.
Aya Kantorovich, the head of institutional research for FalconX pointed to the fact that the Bitcoin network was not hacked, and that it was the transfer process to the hackers that the law enforcement authorities were able to exploit.
“Bitcoin has never been hacked. It is important, in light of the Colonial Pipeline ransom to separate bitcoin the blockchain versus the service providers that store, settle, trade and send the asset,”
She went on to say:
“Any wallet that stores and holds assets on a centralized platform can be frozen. We’ve seen these instances arise historically during exchange hacks both in the US and overseas. However, that has never undermined the validity that bitcoin has not been hacked in over 13 years.”
Jeff Dorman, chief investment officer at Arca, said that the same thing would have happened had the ransom been in fiat currency:
“It’s no different than if I was a hacker of the Colonial Pipeline and I demanded a wire in euros and at some point I got sloppy and I sent it through HSBC, they could get me when the money went through HSBC. That’s the same thing that happened here. At some point the hackers got sloppy with where they were sending the bitcoin, and it went through a centralized wallet or exchange that the FBI had jurisdiction over.”
He added:
“To me that’s actually a bullish case for bitcoin. This idea that bitcoin is used for criminal activity, which has been nonsense from day one because the US dollar is used in almost every criminal activity,” he said. “This actually proves that it shouldn’t ever be used for criminal activity — because of the public ledger, it’s very easy for the FBI to track transactions.”
Diogo Monica, co-founder and president of Anchorage Digital, remarked that if Bitcoin were hackable, then much larger sums of money would be stolen.
“There is no way that the FBI or anybody else found a bug or an issue with bitcoin because bitcoin is the world’s largest bug bounty. There are over $1 trillion locked on bitcoin. If somebody found a bug, they would not be stealing a couple million dollars. They would be stealing trillions of dollars.”
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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