Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

U.S. seizes $2.3 million in bitcoin paid to Colonial Pipeline hackers

Published 06/07/2021, 03:41 PM
Updated 06/07/2021, 08:16 PM
© Reuters. Deputy U.S. Attorney General Lisa Monaco announces the recovery of millions of dollars worth of cryptocurrency from the Colonial Pipeline Co. ransomware attacks as she speaks during a news conference with FBI Deputy Director Paul Abbate and Acting U.S. At

© Reuters. Deputy U.S. Attorney General Lisa Monaco announces the recovery of millions of dollars worth of cryptocurrency from the Colonial Pipeline Co. ransomware attacks as she speaks during a news conference with FBI Deputy Director Paul Abbate and Acting U.S. At

By Sarah N. Lynch, Christopher Bing and Joseph Menn

WASHINGTON (Reuters) -The Justice Department on Monday recovered some $2.3 million in cryptocurrency ransom paid by Colonial Pipeline Co, cracking down on hackers who launched the most disruptive U.S. cyberattack on record.

Deputy Attorney General Lisa Monaco said investigators had seized 63.7 bitcoins, now valued at about $2.3 million, paid by Colonial after last month's hack of its systems that led to massive shortages at U.S. East Coast gas stations.

The Justice Department has "found and recaptured the majority" of the ransom paid by Colonial, Monaco said.

An affidavit filed on Monday said the FBI was in possession of a private key to unlock a bitcoin wallet that had received most of the funds. It was unclear how the FBI gained access to the key.

A judge in San Francisco approved the seizure of funds from this "cryptocurrency address," which the filing said was located in the Northern District of California.

Colonial Pipeline had said it paid the hackers nearly $5 million to regain access. Bitcoin was trading down nearly 5% around 1800 ET (2200 GMT). The cryptocurrency's value has dropped to around $34,000 in recent weeks after hitting a high of $63,000 in April.

Bitcoin seizures are rare, but authorities have stepped up their expertise in tracking the flow of digital money as ransomware has become a growing national security threat and put a further strain on relations between the United States and Russia, where many of the gangs are based.

"Right now, prosecution is a pipedream," Vice President John Hultquist of the Mandiant cybersecurity firm said in praising the move. "Disrupt. Disrupt. Disrupt."

The hack, attributed by the FBI to a gang called DarkSide, caused a days-long shutdown that led to a spike in gas prices, panic buying and localized fuel shortages. It posed a major political headache for President Joe Biden as the U.S. economy was starting to emerge from the COVID-19 pandemic.

The White House urged corporate executives and business leaders last week to step up security measures to protect against ransomware attacks after the Colonial hack and later intrusions that disrupted operations at a major meatpacking company.

Deputy FBI Director Paul Abbate, who spoke at the same news conference as Monaco on Monday, described DarkSide as a Russia-based cybercrime group.

Abbate said the FBI was tracking more than 100 ransomware variants. DarkSide itself victimized at least 90 U.S. companies, including manufacturers and healthcare providers, he said.

Colonial Chief Executive Joseph Blount, who will testify before the Senate on Tuesday, said in a statement that the company had worked closely with the FBI from the beginning and was "grateful for their swift work and professionalism."

"Holding cyber criminals accountable and disrupting the ecosystem that allows them to operate is the best way to deter and defend against future attacks," Blount said.

Commerce Secretary Gina Raimondo said on Sunday the Biden administration was looking at all options to defend against ransomware attacks and that the topic would be on the agenda when Biden meets Russian President Vladimir Putin this month.

Tom Robinson, co-founder of crypto tracking firm Elliptic, said that the bitcoin wallet from which the funds were taken had contained 69.6 bitcoins. The seizure announced on Monday was of just 63.7 bitcoins, which Robinson said likely represented the share that had gone to the DarkSide "affiliate" who had initially hacked into Colonial.

Investigators say DarkSide often used a partnership model with other hacking groups to compromise numerous victims.

DarkSide would normally keep a smaller share for its role in providing the encryption software and negotiating with the victim, Robinson said. On Monday, minutes after the first funds were transferred out, the rest followed. The U.S. government might have seized that second amount as well but not announced it yet, Robinson said.

© Reuters. Deputy U.S. Attorney General Lisa Monaco announces the recovery of millions of dollars worth of cryptocurrency from the Colonial Pipeline Co. ransomware attacks as she speaks during a news conference with FBI Deputy Director Paul Abbate and Acting U.S. Attorney for the Northern District of California Stephanie Hinds at the Justice Department in Washington, U.S., June 7, 2021. REUTERS/Jonathan Ernst/Pool

The FBI affidavit filed on Monday said that the bureau had tracked the bitcoin through multiple wallets, using the public blockchain and tools. Small amounts were shaved off the initial 75 bitcoin payment along the way.

The remaining amount reached the final wallet on May 27 and stayed there until Monday.

Latest comments

Nice to see the US Government earning an honest buck , again !!
This is very very suspicious... how did they get the private key? I think this is another propaganda to blame Russia.... cause it totally does not make sense...
Anybody who knows anything about bitcoin knows that this story makes zero sense. You cannot simply gain access to private wallet keys and "seize" bitcoin...and, even if so, these sorts of criminals do not simply receive bitcoin and keep it all in one wallet. Hackers who have the capability of committing this type of cyber crime would not permit this to happen unless they were colluding with the government and/or this entire thing was simply a fabrication. A "Russian hacker" targeting Colonial Pipeline and demanding bitcoin, the government telling them to pay ransom, and then magically they gained access to the wallet where the hackers magically left all the funds sitting. There sure have been a lot of amazing explainable "coincidences" in DC involving the Biden administration that they do not explain, the media does not ask about, and people are just asked to blindly believe and give the government more power...
Very odd indeed.
Each country currency have historical and value.from historical,why we.accept something.that.worthless.instead our unique,our pround,accept somethimg that.creat by someone ,some company instead??country is not for someone or some company.Its time to control use of crypto and time to use national digital currency instead.national digital currency differ from crypto but its same as paper cash ,another form.
I would never buy $amc et al., but on the flip side who can really say what bitcoin is worth? Its worth what anyone is willing to pay and its possibly inherently worthless as well
I want our currency,dont want crypto instead.
national currency is unique and express ourself,cant instead.
What is not told is that hackers are using our own NSA tools.
At this point, the hackers seem more honest and trustworthy than the government..
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.