Detective accused of Bitcoin theft from Trezor hardware wallet

The National Anti-Corruption Commission (NACC) of Australia has alleged that a federal police officer stole Bitcoin (BTC) from a hardware wallet during a drug raid.

The BTC stash is worth over $4 million at current prices.  

Per reports, a Trezor hardware wallet was discovered during a drug raid, containing 81.62 Bitcoins, alongside a device containing the seed phrase (a sequence of 12 to 24 random words serving as a recovery method in case of theft or loss).

It took approximately three weeks to obtain court approval for access to the wallet. However, upon gaining entry to the wallet, no Bitcoins were found, as Detective Sergeant William Wheatley had allegedly moved them shortly after the raid.

The currency’s trail led investigators to the crypto exchange Binance, where the cybercrime unit discovered that one IP address associated with accessing the stolen coins was connected to the former AFP headquarters.

Initially, suspicions were directed towards an associate of the crime syndicate as the culprit behind the Bitcoin disappearance. However, an investigation that involved analyzing IP addresses linked to the stolen BTC caused the NACC to shift its focus to Wheatley’s potential involvement.

Wheatley maintains his innocence against charges of exploiting his public position for personal gain, theft, or involvement with criminal proceeds. He is reportedly gearing up to challenge the accusations related to the missing Bitcoins from the Trezor wallet.

At the time of the theft, the stolen BTCs were valued at about $309,000, but it has since surged to roughly $4.2 million. 

Crypto thefts plague web3 industry

Cryptocurrency theft remains a significant challenge within the Web3 industry, as cybercriminals exploit vulnerabilities and security loopholes on crypto platforms to enrich themselves. In 2022 alone, over $3.7 billion worth of crypto was stolen by bad actors.

Cybercriminals employ various tactics such as hacking into digital wallets and deceiving users into disclosing their private keys, amongst other dirty tactics, to steal their victims’ funds.

In 2023, the issue of cryptocurrency theft persisted, albeit with a decrease in stolen funds compared to the previous year. Hackers managed to abscond with approximately $2 billion in digital assets through numerous cyberattacks and thefts, marking a decrease from the $3.7 billion stolen in 2022.

Notably, government-sponsored cyber espionage groups from North Korea, including Kimsuky and Lazarus Group, emerged as key perpetrators of cryptocurrency thefts in 2022. These groups stole between $630 to $1 billion by attacking the networks of international aerospace and defense businesses.

In December, Circle CEO Jeremy Allaire revealed the introduction of two innovative on-chain solutions designed to counter theft and illegal activities aimed at blockchain assets.

Allaire highlighted alarming reports indicating nearly $10 billion in cryptocurrency losses between 2021 and 2023. This was largely attributed to hackers and exploiters targeting decentralized protocols. He emphasized the challenge of recovering such assets due to the irreversible nature of crypto transactions.

However, the rise of crypto-tracing tools has also introduced a new era of transparency and accountability in the world of digital currencies. 

These tools and strategies enable law enforcement organizations and cybersecurity professionals to track and analyze cryptocurrency transactions, ultimately leading to the identification of individuals involved in illicit activities.

On Jan. 21, Trezor, a hardware cryptocurrency wallet, raised a security alert following the discovery of a data breach attributed to unauthorized access to their third-party support ticketing portal. 

Trezor has confirmed that 41 cases of exposed data have been exploited, with attackers approaching users to trick them into giving away their recovery seeds, which contain all the information required for gaining access to a wallet. 

Trezor has reached out to all potentially affected users, warning them of phishing attacks that try to obtain recovery seeds. 

The hardware cryptocurrency wallet provider further states that while investigations into the incident are ongoing, no evidence has been found thus far to suggest a compromise of users’ digital assets.