Number Crunch

Colonial Pipeline’s Ransomware Recovery Reveals Bitcoin Is Not Truly Anonymous

Blockchain technology still leaves digital crumbs behind

Sixty-four bitcoin, or roughly $2.3 million: That’s how much cryptocurrency the Justice Department recovered earlier this week from the total 75 bitcoin ransom paid by Colonial Pipeline, as reported by the Wall Street Journal. The cyberattack shut down the country’s largest oil pipeline in May, prompting gas shortages and price hikes across the country.

The ransom recovery reveals a fundamental misconception that cryptocurrencies are anonymous and not traceable. Cryptocurrencies are not tied to people but to digital keys, making their owners pseudonymous rather than fully anonymous. As explained by the Journal’s David Uberti, criminals have relied on blockchain’s pseudonymity to carry out illegal business activities without revealing their names or locations. But in the case of Colonial’s ransom recovery, federal law enforcement leveraged the pseudonymity by tracking the ransom as it moved through a maze of at least 23 different electronic accounts belonging to the hacking group Darkside.

Colonial Pipeline’s high-profile attack is not an isolated incident. More companies are facing ransomware threats, with the number of…