Startup says it can access $235M in locked bitcoin — but owner says ‘no thanks’

Unciphered, a cryptocurrency recovery startup says it’s figured out how to crack an encrypted hard drive containing $235 million in bitcoin that has been locked for 12 years. The only problem is, the drive’s owner doesn’t want it to.

As reported by Wired, the Seattle-based company says that after eight months of research, it’s managed to develop a process that allowed it access to a so-called IronKey USB thumb drive sent to it by Wired.

Now, Unciphered says it’s ready to use the same technique on a drive that’s currently locked in a Swiss vault along with 7,002 bitcoin. 

The drive in question belongs to a Swiss crypto entrepreneur named Stefan Thomas. Thomas received the Bitcoin in 2011 for creating a video titled ‘What is Bitcoin?’ However, shortly thereafter, he lost the piece of paper on which he’d written the password. Since then, he’s used up eight of the 10 password attempts afforded to him by the IronKey before it erases the keys — and access to the fortune — forever.

But this month, through a mutual associate, Unciphered reached out to Thomas to inform him they had successfully unlocked a 2011-era IronKey drive and asked if they could unlock his drive of the same model.

However, Thomas declined their offer. He told Wired he has “been working with a different set of experts on the recovery” for a year now and that they have already been promised a cut of the bitcoin. He said “I’m no longer free to negotiate with someone new,” but added that it’s possible Unciphered could be subcontracted by the two already hired teams.

In response, Uniciphered plans to publish an open letter to Thomas, alongside a video, both with the intention of changing his mind.

“We cracked the IronKey,” said Unciphered’s director of operations Nick Federoff. “Now we have to crack Stefan. This is turning out to be the hardest part.”

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Unciphered says hacking bitcoin drive may open Pandora’s Box 

So why is cracking the drive such a huge deal? IronKeys are ‘military grade‘ USB sticks that contain a self-destruct sequence that’s initiated after 10 failed password attempts.

To crack the drive, Unciphered meticulously deconstructed it using millions of dollars worth of equipment, mapping out the processor on a microscopic level. The company even tracked down engineers who had worked to produce relevant drive parts dating back to the 1990s. 

After roughly eight months of work, the team managed to counter the 10-password attempt limit and, according to Wired, gain “essentially infinite tries.”

“We were hesitant to reach out to him [Thomas] until we had a full, provable, reliable attack,” Unciphered hacker Tom Smith (an alias) told Wired.

Despite its great success, Unciphered is reluctant to reveal the full extent of its research in case it opens Pandora’s box and exposes old IronKey drives to hackers. Its director of operations said, “If this were to leak somehow, there would be much bigger national security implications than a cryptocurrency wallet.”

Unciphered has said that even if it doesn’t get permission to unlock the $235 million bitcoin drive, it will still continue to help recover other users’ irretrievable crypto.

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