Coinbase’s chief security officer has denied allegations that US cryptocurrencies were involved in any seizure of cryptocurrencies related to the recent Colonial Pipeline ransomware attack.
Philip Martin, CFO, took to Twitter on June 8 to explain the company’s involvement or absence with the Justice Department’s order to seize bitcoin.
“Coinbase was not the purpose of the order and did not receive the ransom or any part of the ransom at any time. We also have no evidence that the funds went through a Coinbase account / portfolio. “
1/ I’ve seen a bunch of misconceptions that Coinbase was involved in the recent bitcoin seizure by the DOJ in connection with the Colonial Pipeline ransomware attack. We were not. thread:
– Philip Martin (@SecurityGuyPhil) June 8, 2021
The official confiscation story, in which government officials recovered 63.7 BTC, worth about $ 2.3 million at the time, had a number of irregularities. Federal investigators say they obtained the Darkside Group’s private keys, but did not disclose how the FBI managed to command them.
The #Bitcoin breach involving Ransomware / Darkside / Colonial Pipeline Co. went through @coinbase’s California servers and was probably captured by US investigators there.
Not your keys, not your 63.7 #BTC. pic.twitter.com/4RwZLFww5c
– This is Bullish (@thisisbullish) June 8, 2021.
According to the statement, the private key to the thematic address was in the possession of the FBI in the Northern District of California. This led to a connection to Coinbase, which has servers in the area, as a number of Twitter users have pointed out. Martin denied these allegations, saying:
“I also read that because the confiscation order states property in the Northern District of California, it must be directed to Coinbase. No. This probably means that the private key is located in one of the many field offices of the FBI in Northern California. “
He added that due to the stock exchange’s storage mechanisms, which use a consolidated hot wallet, it “would not make sense” to hand over a specific private key.
Asked how the investigators obtained the private key, he suggested that it was “some good old-fashioned policing to find the target servers”, followed by a request for a mutual legal assistance contract (MLAT) and / or political pressure to gain access.
Concerns have been raised about the authorities’ ability to access cryptographic keys, which played a role in yesterday’s market downturn. However, the authorities have various innovative ways of accessing personal information. The same day, reports emerged detailing a fake application for encrypted communications used by criminals, which was secretly run by the FBI for the purpose of secretly collecting messages, personal information and mass surveillance of criminal activity.
In a June 8 newsletter, Quantum Economics founder and former senior eToro market analyst Mati Greenspan said the recovered ransom was in fact a scourge for Bitcoin, as many expected US politicians to use crypto as a scapegoat for the attack and enforce some strict provisions.
“Instead, they were attached to what we already knew was easier for the authorities to catch criminals using crypto than anything else.”
Greenspan added that “the only valid explanation for the fall in prices is that the markets are random, especially in the short term.” At the time of writing, BTC has been trading 2.2% in the last 24 hours to $ 33,000 after falling more than 10% since the beginning of the week.