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The National Anti-Corruption Commission (NACC) of Australia has accused a federal police officer, William Wheatley, of misappropriating a substantial amount of Bitcoin from a hardware wallet during a crime scene investigation. The incident, which has sent ripples through the law enforcement and crypto communities, involves the alleged transfer of 81.62 Bitcoin, valued at approximately $4.2 million USD at current rates, into Wheatley’s own possession.
Trezor Wallet Containing Bitcoin Taken During Raid
The controversy came to light following a drug raid conducted by Australian police at a residential property in 2019, where a Trezor hardware wallet containing the Bitcoin was discovered. Despite securing the wallet, authorities waited nearly three weeks to obtain the necessary court permission to access its contents. However, by the time access was granted, the wallet was found empty, sparking an intensive investigation.
Initially, suspicion fell on associates of the crime syndicate targeted in the raid, especially after the discovery of a device containing the seed phrase for the wallet. This seed phrase, a critical security feature comprising 12 to 24 random words, serves as a recovery tool in case the wallet is lost or stolen. Yet, the breakthrough in the case came when Detective Sergeant Deon Achtypis of the cybercrime squad utilized crypto tracing software to analyze IP addresses associated with the wallet’s access. This analysis allegedly linked Wheatley to the unauthorized transfer of the Bitcoin.
The Rise in Crypto Tracing Software
The use of crypto tracing software is becoming increasingly prevalent among law enforcement agencies worldwide as a means to combat illicit activities involving digital assets. For instance, in August 2023, the Canadian police announced the adoption of Chainalysis Reactor software to aid in tracing illegal crypto transactions. Moreover, advancements in this technology have significantly improved the recovery rate of stolen cryptocurrencies. In 2023 alone, over $674 million was recovered from more than 600 large-scale crypto hacks.
#PeckShieldAlert 2023 saw 600+ major hacks in the crypto space, resulting in ~$2.61B in losses, with $674.9M recovered. $1.51B lost to hacks (excluding #Multichain unauthorized withdrawals) & $1.1B to scams. This marks a 27.78% decrease from 2022. #DeFi protocols remained prime… pic.twitter.com/G7PIU3WyrX — PeckShieldAlert (@PeckShieldAlert) January 29, 2024
Despite the mounting evidence, Wheatley maintains his innocence, vehemently denying the accusations of exploiting his position for personal gain, theft, and engaging with proceeds of crime. He is reportedly prepared to contest the charges related to the stolen Bitcoins from the Trezor wallet. This case emerges amidst Trezor’s admission of a security breach in January, affecting nearly 66,000 users, further complicating the narrative around the security of digital assets and the integrity of those sworn to protect them.
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