Crypto Wallet Seized but Authorities Can’t Access the $60 Million Within

Wallet containing bitcoins

German authorities seized a cybercriminal’s crypto wallet but have been unable to access the $60 million in bitcoin held within. They can’t unlock the funds because the fraudster has refused to give them the crypto wallet’s password. Authorities have also tried to crack the password but have been unsuccessful so far.

Fraudster Charged for Cryptojacking

The unnamed fraudster was charged and sentenced to two years jail for secretly installing software on other people’s computers. He then used the combined power of the hacked computers, creating a pseudo botnet, to illegally produce bitcoins. This type of cybercrime is known as cryptojacking.

When charged, German authorities seized the cybercriminals crypto wallet, which is believed to contain 1,700 in bitcoins. However, they have been unable to access the bitcoins because the fraudster has steadfastly refused to divulge the wallet’s password. The German prosecutor from the Bavarian town of Kempten, Sebastian Murer, told Reuters “We asked him, but he didn’t say. Perhaps he doesn’t know.”

The fraudster has since finished serving his two-year term and has been released. While the fraudster was incarcerated, the authorities tried to crack the crypto wallet’s password, but were unsuccessful. Consequently, they have ensured that the fraudster can’t access his fraudulent fortune either.

Cybercriminals Aided by Advantages of Cryptocurrency

Cybercriminals are taking advantage of cryptocurrencies to hide the proceeds of fraudulent activities from the authorities. Bitcoin, like many other cryptocurrencies, is a digital currency that is stored on software known as crypto wallets. These wallets are encrypted, which provides two main benefits. They can be anonymously owned, and the cryptocurrency held within can be securely transacted.

At the time the fraudster was jailed, his bitcoins had limited value. However, over the last two years the value of bitcoin has shot up. Consequently, the bitcoins in the cybercriminal’s crypto wallet are now worth more than 50 million Euros (US $60 million).

BR, a German news outlet, said that if the authorities were to gain access to the wallet, the bitcoins would be sold. The proceeds from the sale would then go to the state treasury, as the victims didn’t suffer a financial loss. The bitcoins were not stolen from anyone, instead they were freshly mined.

Where’s the Password?

It is possible that the fraudster has forgotten his password, as the German prosecutor speculates. Which would mean that he, just like the authorities, would not be able to access his bitcoins. Stories abound of people losing crypto fortunes because they have lost their crypto wallets or the passwords to their wallets.

People have accidently thrown away the piece of paper with the recovery word and pin to their wallets. Others, like a UK computer engineer last month, have accidently thrown away hard drives that hold their bitcoins.

The engineer is now offering his local council a share of the bitcoins if they help him excavate the landfill site. The Bitcoins on the hard drive are worth $312 million, which means the council would receive $78 million.

“Two Attempts left”

Also last month, there was a similar case in the US. In this instance a San Francisco based German programmer forgot his password. Not to the crypto wallet but to his IronKey hard drive that contains the keys to his wallet. He had earned 7,002 Bitcoins making cryptocurrency explainer videos, which today is worth $240 million.

IronKey gives users 10 attempts to guess the password before it encrypts its contents. Thomas has already entered the password incorrectly 8 times, giving him just 2 more attempts before his fortune is lost forever. Maybe he should have invested in a password manager instead.

According to the cryptocurrency data firm, Chainalysis, 20% of bitcoin in existence today has been lost. This bitcoin is either in lost wallets or locked in wallets with lost passwords. This means that a total of $140 billion worth of bitcoin is completely inaccessible. Consequently, if the fraudster has indeed lost his password, his bitcoin joins this large and growing pile of inaccessible bitcoin.

Information technology expert
Grace is an information technology expert who joined the VPNoverview team in 2019, writing cybersecurity and internet privacy-based news articles. Due to her IT background in legal firms, these subjects have always been of great interest to her.