Key Bitcoin developer calls on FBI to recover $3.6M in digital coin

By | January 3, 2023
Key Bitcoin developer calls on FBI to recover $3.6M in digital coin
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One of the prominent developers behind the Bitcoin blockchain said he has asked the FBI to assist him in recovering $3.6 million worth of the digital coin that was stolen from his storage wallets on New Year’s Eve.

Luke Dashjr is a developer of the Bitcoin Core, an app that runs 97 percent of the nodes making up the Bitcoin blockchain. Bitcoin Core derives from the software developed by the anonymous Bitcoin inventor who uses the pseudonym Satoshi Nakamoto. That software was called simply Bitcoin, but was later changed to Bitcoin Core to distinguish it from the coin. Dashjr has been contributing to the Bitcoin Core since 2011 and has long championed the concept of decentralization that the cryptocurrency was founded on.

“What the heck, FBI?”

On New Year’s Day, Dashjr took to Twitter to report that his entire Bitcoin holdings—worth roughly $3.6 million—were “basically all gone.” He said the hack stemmed from the compromise of a PGP (Pretty Good Privacy) key that he used to ensure that his downloads of Bitcoin Core and a smaller app known as Bitcoin Knots weren’t laced with malware. He said all his computers were compromised and urged people to hold off downloading new versions for the time being.

“So to be clear: DO NOT DOWNLOAD BITCOIN KNOTS AND TRUST IT UNTIL THIS IS RESOLVED,” he wrote. “If you already did in the last few months, consider shutting that system down for now.”

Dashjr didn’t respond to an interview request.

In the same thread, the developer said he had contacted the FBI and police but hadn’t received a response.

“What the heck @FBI @ic3. Why can’t I reach anyone???” he wrote. “I paid those taxes and the police don’t care. What a scam.”

Dashjr said the wallets compromised were both hot—meaning accessible over the Internet—and what he believed were cold—meaning they were hosted on a device not connected to the Internet. He didn’t elaborate, but it appears he was theorizing that one or more computers he used was infected and that the hackers could then obtain the funds stored on them. It’s hard to make sense of that, however, since a wallet stored on an Internet-connected device is, by definition, hot.

That problem aside, the theory might be consistent with a breach Dashjr reported in November. During that incident, the developer said, the hackers “bypassed my software-side security measures by rebooting the server off an unknown storage device. For about 5 minutes it was running some other system.” The hackers then installed two or three remote shell backdoors.

There’s still a lot that doesn’t add up to the events Dashjr has reported. Without more details, it’s hard to come to any firm conclusions. One takeaway, however, is clear, as evidenced by one of the most influential Bitcoin developers calling on law enforcement to recover his stolen digital coin: the notion that cryptocurrencies provide a decentralized platform that cuts out established authorities is nothing short of a pipe dream.