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Cracking a $2 Million Crypto Wallet

Tuesday January 25, 2022. 07:07 PM , from Slashdot
First, he forgot his PIN -- then he started looking for hackers. From a report: In early 2018, Dan Reich and a friend decided to spend $50,000 in Bitcoin on a batch of Theta tokens, a new cryptocurrency then worth just 21 cents apiece. At first, they held the tokens with an exchange based in China, but within weeks, a broad crackdown on cryptocurrency by the Chinese government meant they would soon lose access to the exchange, so they had to transfer everything to a hardware wallet. Reich and his friend chose a Trezor One hardware wallet, set up a PIN, and then got busy with life and forgot about it. By the end of that year, the token had sunk to less than a quarter of its value, come back up, and then crashed again. Reich decided he wanted to cash out, but his friend had lost the paper where he'd written the PIN and couldn't remember the digits. They tried guessing what they thought was a four-digit PIN (it was actually five), but after each failed attempt, the wallet doubled the wait time before they could guess again. After 16 guesses, the data on the wallet would automatically erase. When they reached a dozen tries, they stopped, afraid to go further. Reich gave up and wrote off the money in his mind. He was willing to take the loss -- until the price started to rise again. From a low of around $12,000, the value of their tokens started to skyrocket. By the end of 2020, it would be worth more than $400,000, rising briefly to over $3 million. It would be hard to get into the wallet without the PIN -- but it wasn't impossible.

And with potentially millions on the line, Reich and his friend vowed to find a way inside. The only way to own cryptocurrency on the blockchain is to have sole possession of a private key associated with a block of currency -- but managing those keys has been a, sometimes high-stakes, challenge from the beginning. The cryptocurrency data firm Chainalysis estimates that more than 3.7 million Bitcoins worth $66.5 billion are likely lost to owners. Currency can be lost for many reasons: the computer or phone storing a software wallet is stolen or crashes and the wallet is unrecoverable; the owner inadvertently throws their hardware wallet away; or the owner forgets their PIN or dies without passing it to family members. As the value of their inaccessible tokens rapidly rose in 2020, Reich and his friend were desperate to crack their wallet. They searched online until they found a 2018 conference talk from three hardware experts who discovered a way to access the key in a Trezor wallet without knowing the PIN. The engineers declined to help them, but it gave Reich hope. 'We at least knew that it was possible and had some directional idea of how it could be done,' Reich says. Then they found a financier in Switzerland who claimed he had associates in France who could crack the wallet in a lab. But there was a catch: Reich couldn't know their names or go to the lab. He'd have to hand off his wallet to the financier in Switzerland, who would take it to his French associates. It was a crazy idea with a lot of risks, but Reich and his friend were desperate. Gripping story.

Read more of this story at Slashdot.
https://it.slashdot.org/story/22/01/25/188209/cracking-a-2-million-crypto-wallet?utm_source=rss1.0ma...

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