Bitcoin was down by ten percent in 24 hours on Tuesday morning amid questions over the cryptocurrency’s security, after FBI investigators revealed they had been able to access a hacker’s digital wallet and retrieve part of a ransom paid over the cyberattack that shut down the Colonial Pipeline last month.
Bitcoin’s value has dropped by nearly in half recent weeks after surging to an all-time high of $63,000 in April, shaking confidence in the market.
But the digital currency is still up 9 percent since the start of the year, and has more than tripled in price from a year ago, CNBC reported.
Smaller digital coins also slumped Tuesday, with Ether falling 13 percent to $2,396 and XRP falling 12 percent to $0.82.
The slump comes after U.S. officials said they seized $2.3 million of a $4.4million bitcoin ransom which was paid to hacker group after it shut down the Georgia-based Colonial Pipeline, causing fuel shortages and panic buying at the pump.
Court documents said investigators had access to the password for a bitcoin wallet allegedly belonging to one of the hackers, and were able to retrieve the funds.
The nation’s largest pipeline, which supplies roughly half the fuel consumed on the East Coast, temporarily shut down its operations on May 7 after hacker group DarkSide broke into its computer system.
The world’s largest cryptocurrency’s value dropped to $32,154.73 Tuesday morning amid security concerns following a cyberattack
Colonial officials said they took their pipeline system offline before the attack could spread to its operating system, and decided to pay a 75 Bitcoin ransom, which equals about $4.4million, in hopes of bringing the pipeline back online as soon as they could.
Bitcoin has struggled in recent weeks amid fears of renewed regulatory scrutiny in China, and critical tweets by tech kingpin Elon Musk.
Musk has been a major promoter of cryptocurrencies but has turned critical of bitcoin since suspending Tesla plans to take it in payment for cars, owing to concerns about the energy use required to ‘mine’ the digital coins
Many crypto specialists have struggled to understand the motives behind his tweets.
‘He’s trolling the community,’ Bobby Ong, co-founder of crypto data aggregator and analytics website CoinGecko said last week.
A slew of crypto-related accounts in China’s Twitter-like Weibo platform were blocked over the weekend, as Beijing stepped up a crackdown on bitcoin trading and mining.
More actions are expected, including linking illegal crypto activities in China more directly with the country’s criminal law, according to analysts and a financial regulator.
Last month, China’s State Council, or cabinet, vowed to crack down on bitcoin mining and trading, escalating a campaign against cryptocurrencies days after three industry bodies banned crypto-related financial and payment services.
Over the weekend, access to several of widely followed crypto-related Weibo accounts was denied, with a message saying each account ‘violates laws and rules.’
Colonial Pipeline, the nation’s largest pipeline temporarily shut down its operations on May 7 after hacker group DarkSide broke into its computer system
There has also been pressure to introduce regulation of cryptocurrencies in the US.
Internal Revenue Service chief Charles Rettig said on Tuesday that Congress needs to provide clear statutory authority for the tax agency to collect information on cryptocurrency transfers valued at over $10,000 that largely go unreported.
‘I think we need congressional authority,’ Rettig said in testimony to the Senate Finance Committee. ‘We get challenged frequently, and to have a clear dictate from Congress on the authority for us to collect that information is critical.’
He said cryptocurrency market capitalization is over $2 trillion, with more than 8,600 exchanges worldwide, ‘and by design, most crypto virtual currencies are designed to stay off the radar screen, so we will be challenged right now.’
The operation to recover the cryptocurrency from Russia-based hacker group DarkSide is the first undertaken by a specialized ransomware task force created by the Biden administration Justice Department, and reflects what US officials say is an increasingly aggressive approach to deal with a ransomware threat that in the last month has targeted critical industries around the world.
Bitcoin’s value has dropped by nearly in half recent weeks after surging to an all-time high of $63,000 in April, shaking confidence in the market
DOJ’s ransomware task force tracked transfers of cryptocurrency and identified that 63.7 bitcoins had been transferred to a specific address for which the FBI has the ‘private key,’ or password, needed to access assets accessible from the specific bitcoin address.
DarkSide reportedly received $90 million in bitcoin ransom payments before being shut down last month.
The hacker group ran a ‘ransomware as a service’ business model, where hackers develop and market ransomware tools and sell them to affiliates who then carry out attacks, CNBC reported.
Any ransom payment made by a victim is then split between the affiliate and the developer, blockchain analytics firm Elliptic reported.
In the Colonial Pipeline ransom payment, 85 percent – or 63.75 bitcoins – went to the affiliate and 15 percent went to the DarkSide developer, Elliptical reported.
The hack caused a shutdown lasting several days, leading to a spike in gas prices and fuel shortages in some states on the East Coast. It posed a major political challenge for President Joe Biden as the US economy was starting to recover from the COVID-19 pandemic.
‘The extortionists will never see this money,’ Stephanie Hinds, the acting US attorney for the Northern District of California said.
‘Today, we turned the tables on DarkSide,’ Deputy Attorney General Lisa Monaco said Monday at a news conference announcing the operation. ‘By going after an entire ecosystem that fuels ransomware and digital currency, we will continue to use all of our tools and all of our resources to increase the costs and the consequences of ransomware attacks and other cyber-enabled attacks.’
The FBI generally discourages the payment of ransom, fearing it could encourage additional hacks. Monaco said the takeaway for the private sector is that if companies come quickly to law enforcement, officials may be able to conduct similar seizures in the future.
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.
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 President Joe Biden meets with Russian President Vladimir Putin this month