When the Bitcoin 2021 conference kicked off in Miami last weekend, it seemed destined to dominate the news headlines in the days that followed.
After some rather embarrassing performances from some of bitcoin’s most famous advocates and a stage invasion by a very eager Dogecoin backer, the conference certainly kept crypto watchers entertained.
But despite the fervour surrounding the conference and the subsequent announcement from the President of El Salvador that bitcoin would become legal tender in the Central American nation, the positive news for cryptocurrency and crypto prices swiftly took a turn for the worst.
FBI recovers millions in Bitcoin ransom
In early May, the Colonial petroleum pipeline which transports fuel from New York all the way to Texas was subjected to a ransomware cyberattack. This ultimately resulted in the pipeline being shut down for five days, causing fuel shortages along the Eastern Coast of the US.
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Colonial paid a more than $6 million ransom in order to get back their data from a Russian hacking group that calls themselves DarkSide.
In a startling development, the US Department of Justice revealed on Monday that the FBI had seized almost $2.6 million of the bitcoin ransom that had been paid to DarkSide.
According to court documents, the FBI was able to access the private key for one of the hackers’ bitcoin wallets in order to recover the assets.
Rumours quickly started to circulate that US law enforcement had effectively hacked the bitcoin network and that bitcoin was no longer safe from government intervention.
Bitcoin swiftly fell 8 per cent on the news, providing yet another catalyst for the current weakness seen in cryptocurrency markets.
Crypto news website Decrypt concluded that it was unlikely that the FBI had been able to hack the criminals’ bitcoin wallet and compromise the security of the broader bitcoin network.
When asked by the media how the FBI was able to get into the hackers’ bitcoin wallet to recover the funds, FBI assistant special agent Elvis Chen said we don’t “want to give up our tradecraft in case we want to use this [method] again for future endeavours.”
The tax man is gunning for crypto
In an appearance before the Senate Finance Committee on Tuesday, Internal Revenue Service (IRS) Commissioner Charles Rettig stated that Congress needs to provide clear authority to the taxation agency to gather information on cryptocurrency transfers valued at more than $10,000 US dollars.
Currently these transfers go largely unreported. But as pressure builds to regulate cryptocurrency and the US government attempts to come to grips with some of the largest deficits in history, the tax man is coming a knocking.
Rettig concluded that Congressional authority is required in order to collect information that the IRS deems critical. As it stands the IRS is frequently challenged by crypto holders to show that they possess the authority to look into their financial affairs.
If the IRS’ request is approved by Congress it would put the issue to bed once and for all.
With the total value of global cryptocurrencies now over $2.5 trillion, the IRS is concerned by how most crypto transactions are designed to stay off the radar of authorities by design.
The Biden administration is targeting crypto assets to ensure capital gains taxes are paid and to crack down on the use of cryptocurrency for illicit activities, such as ransomware attacks and money laundering.
Crypto price falls continue
On Tuesday, bitcoin hits its lowest price since the crash of May 19 wiped out more than $13,000 US dollars worth of value in a single day.
Depending on the exchange in question, bitcoin traded for just over $31,000 US dollars on Tuesday before recovering some of its losses.
Chief Currency Analyst for news and trading website ForexLive Adam Button called the price chart for bitcoin “ugly” as sentiment continues to turn on crypto, amid fears of an even larger sell off.
From ethereum to dogecoin, almost all cryptocurrencies have been hit by the current market doldrums and remain potentially vulnerable to further falls according to some analysts.
As technical indicators for the crypto market appear increasingly concerning, crypto is once again at a major crossroads. It could rocket off back into the stratosphere or this could be the beginning of a more protracted correction, like the one that defined late 2017 and early 2018.
Crypto Enters the Crucible
As the push to regulate crypto continues to grow and law enforcement become increasingly engaged with the crypto space as a result of cybercrime, the crypto world finds itself at something of a precipice.
In the coming months and years it will be tested as the crypto world attempts to adapt to new regulations, government oversight and concerns about its utility as a technology.
How exactly crypto will fare amid this uncertain future is challenging to predict, but as crypto enters the crucible it is increasingly clear that what emerges in the coming years, will be quite different to what we see before us now.
Tarric Brooker is a freelance journalist and social commentator | @AvidCommentator