Ransomware attack on Colonial Pipeline rubs off on Bitcoin

On May 7th, Colonial Pipeline Co. a US-based oil pipeline system was a victim of a ransomware attack allegedly orchestrated by the Eastern-European-based hacker group, DarkSide. It happened that the hackers requested the ransom be paid in cryptocurrency. 

The CEO and president of Colonial Pipeline, Joseph Blount, Jr., announced a day after the attack that they paid $5 million in ransom to the hacker group. Although this transaction was performed using cryptocurrency, the United States Senate had shown relentlessness in helping the pipeline company retrieve their money. 

Yesterday, according to CNN, the United States’ Department of Justice announced that it seized about $2.3 million in Bitcoin from DarkSide. On their public address, the DOJ claimed that they “turned the table on DarkSide.”

If the US Department of Justice and the country’s intelligence could trace a transaction on the Blockchain and seize almost half of the cryptocurrency paid as ransom, what does this say about the anonymity and no-government-control feature of the technology that its founder, Satoshi, boasted about? 

Is this a leadway for Bitcoin regulation?

It’s hard to solidly stand on the claim that Blockchain transactions are unretractable. If the DOJ could “pursue the money” and catch up with it on the notoriously complex Bitcoin network, there is the possibility that several victims of scams of Bitcoin trading software can have a shot at getting their money back.

Even more market-worthy, Coinbase could employ this method to reverse the Bitcoin accidentally sent by its employee to a wrong address just last month. 

How has this affected the Bitcoin price crash?

Since the Coinbase Bitcoin episode, the crypto grandfather has been on steady decline with, of course, a few ups now and then. But more recently, it is taking a deep dive toward the $30,000 mark as it closes today at a nudge above $31k. 

It appears that the DOJ’s successful attempt at retrieving sent Bitcoins from DarkSide raises questions of the cryptocurrency’ uncontrollability. This, however, has the potential to inspire negative sentiment in the market as most crypto holders chose it for that reason. 

With the fear that their ownership of The Coin could be revealed and definitely questioned, Bitcoin Whales could be selling off some or all of their coins. 

Nevertheless, there’s more to the Bitcoin downward journey than meets the eyes. Over the weekend, China took an outrageous step against Bitcoin miners and traders in the territory. They have blocked accounts that were directly related to the cryptocurrency on Weibo, a social networking platform, over the weekend. 

With China accounting for 75% of Bitcoin miners in the world, a crackdown against mining activities in the territory can pose a real threat to the cryptocurrency’s viability. And as you have imagined, threats of such magnitude can inspire fear in the market. This most probably explains the recent decline of Bitcoin price in excess of 10% today. 

Conclusion

The crypto market is one of the most volatile that the world has seen in over half-a-century. This volatility is precipitated by inexperienced traders rage-buying and panic-selling at the slightest uncertainty. 

Regarding uncertainty, however, the market’s future remains undecided as regulators keep poking their hands in this pie figuring ways to keep it under the government’s “power net”. Both China’s crackdown against miners and the United States’ intelligence in retrieving sent Bitcoins are proof of the unpredicted vulnerability of Blockchain technology.