The police get their hands on $60 million worth of bitcoins…but don’t have the password!

It’s private !An old “article” dealing with the seizure of bitcoins by the German authorities, allows us to dive back into the news of decentralization, and in particular the importance of the private key in such an environment. It also provides an opportunity to qualify the debate on a Bitcoin (BTC) facilitating or not facilitating money laundering, the reality being neither all white nor all black.

Germany seizes bitcoins, but…

According to a February 4, 2021 article by the German media BR, the country’s police are unable to access more than 1,700 “seized” BTC, belonging to an offender who served a sentence of more than two years in prison for deploying a cryptojacking network. These bitcoins were not stolen, but are all from this illegal mining.

The wallet owner has since refused to divulge the authorities the password protecting the famous wallet. Those 1,700 BTC are worth over $72 million at the time of writing. The German authorities intended to sell them to replenish the coffers of the public treasury. They were still able to recover 86 BTC directly – on the initial 1,800 BTC – which would not have been protected by a password, to draw 500,000 euros.

Authorities believe that the owner of the wallet himself cannot access his bitcoins. The Kempten city prosecutor speculates that the hacker “perhaps” does not know his own password.

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Decentralization and private key: an advantage demonstrated in practice

The inability of the authorities to sell bitcoins that they have theoretically “seized”, show – certainly to the detriment of German justiceone of the main advantages offered by a decentralized payment system like bitcoin. Only people who have the private key and/or the associated passphrase of a bitcoin wallet can access the corresponding BTC.

Bitcoin, a real digital safe

Justice cannot seize bitcoins by simply issuing an attachment order, while the latter would be immediately applied by a bank which would then help to freeze the assets of the person concerned. A decentralized system like bitcoin allows its users to be protected from certain abuses perpetrated for example by institutions in countries where the rule of law does not reign.

Bitcoin and cryptocurrencies: godsend for criminals?

Delinquents and criminals using bitcoin or a similar system would they therefore systematically escape justice? ? The general idea of ​​many politicians would be that the assets of criminals would then remain protected in their wallets… as long as they do not see them on centralized exchanges which cooperate more and more with justice. In addition, another fear would be that organized crime could choose to then dispose of these bitcoins for an old-fashioned cash transaction, within organized networks.

In practice, and while such networks do exist (and are routinely taken down by law enforcement around the world), careful analysis of the evidence demonstrates that cryptocurrencies are only very marginally used to launder crime money. . According to the most recent report from Chainalysis, a firm specializing in tracking crypto funds, never the proportion of illegal activities has not been so tiny compared to legitimate transactions, since they now only represent 0.15% of total crypto transactions in 2021!

These 1,700 BTC and more therefore escape German justice for the moment, unlike the 215 BTC that the authorities auctioned in October 2021. Will the judicial system manage to develop in 2022 a way to effectively seize, or failing to annihilate the value of illegal cryptocurrencies?

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