A recent court case has revealed some interesting information about the supposed anonymity and security of Bitcoin – and, by extension, other cryptocurrencies.
The United States took action in federal court Monday to protect and ultimately return more than $154 million in funds that were allegedly stolen from a subsidiary of Tokyo-based Sony Group Corporation and then seized by law enforcement during the FBI’s investigation of the theft.
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According to the government’s complaint, Rei Ishii, an employee of Sony Life Insurance Company Ltd. (“Sony Life”) in Tokyo, allegedly diverted the $154 million when the company attempted to transfer funds between its financial accounts. Ishii allegedly did this by falsifying transaction instructions, which caused the funds to be transferred to an account that Ishii controlled at a bank in La Jolla, California. Ishii then quickly converted the funds to Bitcoin cryptocurrency, the complaint said.
Based on evidence uncovered during the FBI’s investigation, a seizure warrant was authorized in June 2021 by a U.S. Magistrate Judge in the Southern District of California. As alleged in the supporting affidavit, law enforcement was able to trace Bitcoin transfers and identify that approximately 3,879.16 Bitcoins, representing the proceeds of the funds stolen from a subsidiary of Sony Life, had been transferred to a specific Bitcoin address and then to an offline cryptocurrency cold wallet.
The FBI, with significant assistance from Sony and Citibank, continued to investigate in cooperation with Japan’s National Police Agency, the Tokyo Metropolitan Police Department, Tokyo District Public Prosecutors Office, and JPEC (Japan Prosecutors unit on Emerging Crimes). As a result of this coordinated effort, investigators obtained the “private key” – the rough equivalent of a password – needed to access the Bitcoin address. All the Bitcoins traceable to the theft have been recovered and fully preserved. Ishii has been criminally charged in Japan.
There’s more at the link.
One of the features of cryptocurrencies touted by their promoters is the supposed security of your holdings – if you hold the “private key” and keep it secure, nobody else can trace or touch them. Well, I guess this case proves that isn’t so any longer. Furthermore, if law enforcement can do this, so can law-breakers.
Is cryptocurrency still a safe and secure method of storing and/or transferring wealth? You be the judge. Personally, I’ve always been dubious about that, and now I’m even more so.