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IRS’ Plans For Cracking Cryptocurrency Wallets

Over the past decade, the emergence and rapid adoption of cryptocurrencies have led many to hold their assets in cryptowallets, purpose-built software and devices that store the public and private cryptographic keys to track ownership of cryptocurrencies so users can send, receive and store digital currency.

While cryptocurrencies and wallets are legal, they are often used in ransomware attacks, where criminals demand payment in virtually untraceable Bitcoin. Even if a hardware cryptowallet -- one of the most secure wallet types that is often used for storing large amounts of cryptocurrency -- is submitted as evidence in a criminal investigation, law enforcement has no way to access the data if its owner is unwilling or unable to unlock the wallet.

Now, the IRS’ Criminal Investigation unit will be working to unlock cryptocurrency wallets so investigators can more easily track the movement of cryptocurrencies and potentially recover stolen assets and prevent theft of digital currency.

IRS will be working with VTO Inc., a Colorado-based firm specializing in device forensics, to research and develop techniques for gaining access to cryptowallets by exploiting hardware, software and firmware vulnerabilities that may exist in the secure devices.

The IRS’s goal is to...

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Written by Shourjya Mookerjee.

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