Bitcoin Network’s Security Concerns Raised As FBI Gets Access to Wallet Passwords, BTC Tanks 10%

Published June 8, 2021 | Updated June 8, 2021

In Brief
  • FBI access to the private keys of the Bitcoin wallet raised doubts over the network security.
  • The Bitcoin network’s full-proof security looks under threat in case third-party players can have such easy access to the wallet passwords.

Bitcoin Network’s Security Concerns Raised As FBI Gets Access to Wallet Passwords, BTC Tanks 10%

  • FBI access to the private keys of the Bitcoin wallet raised doubts over the network security.
  • The Bitcoin network’s full-proof security looks under threat in case third-party players can have such easy access to the wallet passwords.

While the FBI managing to seize the ransom amount from hacking group Darkside is positive news, it has simultaneously raised concerns over the security of the Bitcoin (BTC) network.

On Monday, June 7, the U.S. Department of Justice (DoJ) and the FBI it has managed to seize $2.3 million from the hacking group Darkside which it obtained as ransom money from Colonial Pipeline. The hackers had hacked into Colonials operations last month in May 2021 causing major fuel shortages and price hikes.

On Monday, the DoJ said that it managed to recover half of the total $4.4 million paid in ransom. Interestingly, how did the FBI managed to get access to the private keys of hackers’ wallets remains a mystery. Interestingly, the U.S. DoJ said that it effectively had the password to the Bitcoin wallet where the hacker had send the funds. FBI Deputy Director Paul Abbate said:

“There is no place beyond the reach of the FBI to conceal illicit funds that will prevent us from imposing risk and consequences upon malicious cyber actors.”

U.S. DoJ’s Deputy Attorney General Lisa O. Monaco also added that they have all the tools to trace the flow of funds.

Well, this has certainly raised doubts over the security of the Bitcoin network. The question is does the FBI and other security agencies have access to the private keys of more such Bitcoin wallets? The Bitcoin (BTC) price has also crashed 10% after the new broke out. At press time, BTC is trading 9.84% down at $32,883 levels.

The popular crypto analyst that goes by the name Mr. Whale on Twitter said that we just cannot call this correction FUD. The analyst believes that the FBI seizure has raised serious security concerns leading to this price crash. Interestingly, the analyst also points out that the Bitcoin network uses the same security algorithm – SHA 2 – that was designed by the NSA.

FBI Used the Blockchain Explorer Software

An affidavit from an FBI agent shows that the security agency used a blockchain explorer software that allows its users to search blockchains like Bitcoins while providing additional information about the amount and destination of transactions. The affidavit notes that this was basically to figure out different Bitcoin addresses used by Darkside to launder the ransom money.

The FBI noted that it was able to access one such BTC address that had 63.5 BTC. Interestingly, the agent notes that the FBI, fortunately, had the private key of this address but doesn’t explain how. This has certainly raised severe doubts that whether if the BTC network is full proof and how can a third party, even if it is the FBI, have so easy access to the private keys of the wallet.

Disclaimer
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
About Author
Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.

Subscribe to our newsletter for free

Bhushan Akolkar 541 Articles
Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
Follow Bhushan @