Bitcoins From Criminality Seized

Successful tracing of Bitcoin wallet hacker

Where there is money, there is crime. That maxim doesn’t need much elaboration, or imagination, to perceive its reality.

Maybe there are signs the game is now tougher for crime in a few key areas: Bitcoin as the proceeds of crime, and end-to-end encrypted mobile calls and messages through the EncroChat service.

It appears unnamed government intelligence agencies recently cracked EncroChat encryption leading to a huge mop-up of organised crime and drugs almost world-wide. And these criminals that haven’t been rounded up yet won’t be able to sleep peacefully for a long time still!

Looking at the Bitcoin situation.

For a long time Bitcoin cryptocurrency transactions were commonly regarded as anonymous from a practical standpoint, unless one had the extremely long encryption keys for the particular digital wallets concerned. Digital wallets are where owners keep their stash of Bitcoins on the Blockchain distributed ledger system. The encryption algorithms for the digital wallets concerned were regarded as uncrackable.

Ross Ulbricht, now in prison with a very long sentence for his role (founder and key operative) in Silk Road, a darknet site involved in criminal activity on a global scale and doubtless the ruination of countless lives in one way or another. Enough is already in print about that.

Criminal business on Silk Road was transacted in Bitcoins.

When Ross Ulbricht was jailed there were Bitcoin wallets associated with Silk Road containing over 144,000 Bitcoins. But the Silk Road Bitcoin wallet was hacked and the hacker concerned made off with (transferred to a different Bitcoin wallet) about 70,000 Bitcoins.

Those hacked Bitcoins are valued at more than $1Billion today.

Those bitcoins have sat stagnant in a digital wallet for 7 years until recently, as authorities did not know the encryption key of the wallet or the identity of the hacker. The particular wallet was visible on the public blockchain and was being watched carefully by people interested in these things, including the US authorities relating to investigating crime and hacking, such as the NSA, the FBI, US Cyber Command, and it seems the Internal Revenue Service.

But recently there was a movement of these bitcoins from one account to another. Due to a capability hitherto unknown, the individual making those transfers was identified by US authorities and ‘persuaded’, this article says, to relinquish his $1Billion stash of Bitcoins. Bitter medicine for the hacker I’m sure, and must have been a terse conversation between said hacker and the US IRS.

This is a great article by Wired.