Police in Australia have seized $6.4 million in cryptocurrency. It did that after deciphering the seed phrase of suspect Jay Je Yoon Jung’s cryptocurrency wallet. The police are transferring it to their own cold storage device.
Jung is alleged to have developed the Ghost messaging app that he installed on modified cell phones. Criminals used it to communicate secretly with one another. The police refused to comment on how exactly analysts cracked the seed phrase. However, they said they did it after analyzing digital devices seized from the accused’s property.
The Rise of Cryptocurrency
Cryptocurrency has a lot of potential use cases. Developers use it to develop dApps and smart contracts on blockchain networks. The creator had originally thought of crypto to facilitate quick and inexpensive peer-to-peer payments, which it still provides.
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An increasing number of businesses and e-commerce organizations also accept cryptocurrency. The ETH casino sites have also proven popular because cryptocurrency transfers complete in seconds. Those transactions cost just a few cents per transaction compared to BTC’s slightly higher transaction costs.
Criminal Use
However, it is also popular with organized crime gangs and criminal enterprises because of its privacy and anonymity. Its pseudonymous payments mean that police cannot track payers or payees, while its advanced encryption means that even if police are aware of payments being made, it is difficult to trace those payments.
The complex security requirements of crypto wallets also mean that it can be difficult to retrieve crypto funds and seize digital assets if criminals are arrested. However, Operation Kraken, an initiative set up by Australian police, proves that difficult does not necessarily mean impossible.
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What is a Seed Phrase?
When users set up crypto wallets, the platform offers seed phrases. These phrases can theoretically be any length but usually consist of 12, 18, or 24 words. The platform picks words randomly. If the user loses access to his wallet, he can use the seed phrase to regain access to the wallet.
Cracking the Seed Phrase
Third parties can also use seed phrases to gain access to a person’s wallet. Crypto hacks are fairly common, leading to the theft of billions of dollars of cryptocurrency every year. Seed phrases are important, but they are difficult to remember because they consist of long strings or unrelated words. Users are advised not to screenshot and save the phrase because this would give easier access to hackers and thieves. Most people write the phrase down or may store it on alternative, external devices. There are billions of possible combinations of words, which makes common hacking attempts, like brute force attacks, impossible.
Brute Force Attacks
Brute force attacks essentially use trial and error. A small piece of code will attempt to run through every possible combination of words to get into a device. Given enough time, computational power, and access to all possible words, brute-force attacks will eventually prove successful. However, even using a supercomputer, this method of hacking a seed phrase would take several times longer than the universe has existed to work through every possible combination of words.
Physical Seed Retrieval
Operation Kraken police analysts are more likely to have found words used in the seed phrase spread across multiple devices or potentially stored on a single separate device to access Jung’s wallet and then transfer the $6.4 million funds to their own cold wallet.
The Ghost App
From South Wales, 32-year-old Jae Je Yoon Jung was one of the latest suspects. The police arrested him under the Operation Kraken. He faces multiple charges including supporting criminal organizations. He created a private messaging app known as Ghost. Jung installed the app on modified devices and sold the devices for approximately $1,500 each.
Each purchase came with 6 months of access to the app and included regular updates to ensure the software continued working. Operation Kraken uncovered the operation by gaining access to the phones and the apps on them.
Operation Kraken
That isn’t the first arrest the police have made as part of Operation Kraken. In the same month of Jung’s arrest, the police arrested members of a suspected syndicate in Western Australia. In total, the police have made 46 arrests. They have also executed 93 search warrants. The police seized more than $2 million in cash, as well as more than $10 million in other assets, including cryptocurrency.
Seized Funds
The funds from this latest arrest are currently secure in the Australian Federal Police (AFP) secure storage. The AFP said it would transfer the funds to the government following the investigation. It went on to say that they may use funds to support law enforcement initiatives. Acting Commander of the AFP, Scott Raven, warned that the AFP will seize criminal assets, whether they are in the form of real estate, cash, or cryptocurrency.
