The FBI Tracks Down Colonial Bitcoin Ransom–How Crypto Scam Fund Recovery Is Possible

Most of us have seen old movies featuring hostages. Usually, the kidnappers demand hundreds of thousands or a million dollars in unmarked bills in a suitcase deposited in person in an alley at a specific time.

Modern blackmailers and kidnappers do not need to go through all of this trouble. They can simply demand bitcoin and other cryptocurrencies and feel confident that they can hide their identities. 

21st century blackmail scams confront people and claim they have compromising photos or documents that can be kept from public view if the victim simply hands over a certain amount of money in cryptocurrency. In addition, ransomware can sabotage systems until they get huge sums from their targets.  

The most high-profile example of ransomware and bitcoin recently has been the Colonial Pipeline incident in which the company paid ransomers 75 bitcoin or $4.4 million. Saboteurs hacked the Colonial pipeline, a major supplier of fuel to the East Coast, which caused substantial fuel shortages. This led to panic buying and price hikes until service returned with the ransom was paid. 

The situation understandably led to anxiety that other utilities would be held hostage by hostile parties demanding cryptocurrencies. The reason so many cybercriminals prefer to use digital currencies is that, although all transactions can be publicly viewed on the blockchain, there are no names but only codes. These codes are linked to the actual transactions not the user. 

The anonymity is a double-edged sword. On the one hand, it can increase the security of transactions and can keep them from being viewed by hackers and people who will misuse the information. However, the anonymity of the blockchain also provides cover for cyber crimes and makes money laundering easier. 

However, this conventional wisdom that has made cybercriminals feel so sanguine is now being refuted. Increasingly, law enforcement and crypto security experts can unmask scams that depend on the blockchain for secrecy. 

Improved Technology is Powering Crypto Scam Fund Recovery

The FBI has managed to recover over half of the money paid in ransom during the Colonial Pipeline case because of technological advances and the contribution of blockchain experts. 

Although the blockchain is anonymous, with the help of new algorithms, patterns in cryptocurrency transactions can be traced. Tech scholars at the University of Cambridge are successfully identifying patterns of financial transactions to identify bitcoin frauds. One pattern is derived from a 19th century British legal theory about how to track down bank theft. 

Experts are now finding ways to track patterns of money laundering to identify stolen bitcoin. 

In the recent investigation of the Colonial Pipeline ransomware affair, the FBI has recovered $2.3 million or 67.3 bitcoin of the total $4.4 million. It should be noted the investigation is ongoing and after just a month, more than half of the money has been recovered. This is great news for those who are concerned about the likelihood of fund recovery from crypto scams. 

Do you need to create a crypto complaint? Talk to CryptoComplaint Experts

Consult with CryptoComplaint experts immediately if you have lost money to a CFD scam, a forex trading scam, a crypto scam or another type of fraud. Our team can provide solutions and advice on how to seek restitution and recover from fraud.