The DOJ says the Treasury Department must turn Trump’s tax returns over to Congress

Donald Trump
Former president Donald Trump speaks at the Conservative Political Action Conference in Dallas, Texas, on July 11, 2021.

  • The DOJ believes there is “ample basis” for the House Ways and Means Committee to obtain Trump’s tax returns.
  • Getting Trump’s taxes would “further the Committee’s principal stated objective of assessing the IRS’s presidential audit program,” the DOJ’s Office of Legal Counsel said.
  • The Treasury Department “must comply with the Ways and Means Committee’s” request, OLC said.
  • See more stories on Insider’s business page.

The Justice Department’s Office of Legal Counsel determined on Friday that the Treasury Department must turn over former President Donald Trump’s tax returns to the House Ways and Means Committee.

In a memorandum, Dawn Johnsen, the acting assistant attorney general at OLC, said the office believes “there is ample basis to conclude” that turning Trump’s taxes over to the committee would “further the Committee’s principal stated objective of assessing the IRS’s presidential audit program-a plainly legitimate area for congressional inquiry and possible legislation.”

However, according to ongoing litigation on the issue, Trump can be given a 72-hour window to try and stop the Treasury from turning over his taxes.

In Friday’s memorandum, Johnsen wrote that while tax records should generally be kept confidential, there are some narrow exceptions. One such exception allows “for special treatment and enhanced access to tax information” for congressional tax committees.

The provision states that “‘[u]pon written request from the chairman of the Committee on Ways and Means of the House of Representatives, the chairman of the Committee on Finance of the Senate, or the chairman of the Joint Committee on Taxation, the Secretary shall furnish such committee with any return or return information specified in such request,'” Johnsen wrote.

Ways and Means chairman Richard Neal first requested six years of Trump’s taxes from the IRS in April 2019 as part of a wide-ranging investigation into the agency’s auditing process. The request came after Trump repeatedly refused to disclose his tax returns to the public, citing an ongoing audit.

The Treasury Department subsequently asked the OLC for guidance on whether it should turn over the documents to Congress, saying it believed Neal’s request was a “pretext” for the panel’s “true purpose” of going on a fishing expedition through Trump’s finances.

In May 2019, the OLC said it believed the Treasury’s determination was “reasonabl[e]” and that the committee did not have a legitimate legislative purpose in sifting through Trump’s taxes, and the Treasury then denied Neal’s request.

The Ways and Means Committee later filed a lawsuit seeking to enforce its subpoena for Trump’s taxes, and Neal sent another written request in June 2021 for the tax records from 2015 through 2020.

The Treasury Department again contacted the OLC for guidance on the matter, and in Friday’s letter, Johnsen wrote that the committee’s investigation covers “a plainly legitimate area for congressional inquiry and possible legislation,” and that it should therefore be granted access to Trump’s taxes.

Johnsen’s memorandum went on to say that “even if some individual members of Congress hope to see information” on Trump’s tax returns “merely ‘for the sake of exposure,’ … that would not invalidate the legitimate objectives that the Committee’s receipt of the information in question could serve.”

This story is breaking. Check back for updates.

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Trump told DOJ officials to ‘just say that the election was corrupt’ and ‘leave the rest to me,’ new documents show

Trump thanksgiving White House
  • Trump pressured the top two DOJ officials to call the 2020 election “corrupt” without evidence, The New York Times reported.
  • “Just say that the election was corrupt + leave the rest to me,” Trump told the officials.
  • They told Trump “much of the info you’re getting is false,” according to one official’s notes.
  • See more stories on Insider’s business page.

Former President Donald Trump pressured the top two Department of Justice (DOJ) officials in late December to publicly announce that the 2020 election was “corrupt,” despite the department’s conclusion that there was no evidence to support the claim, The New York Times reported Friday.

On December 27, Trump called then-Acting Attorney General Jeffrey Rosen and his deputy, Richard Donoghue, and urged them to “just say that the election was corrupt + leave the rest to me,” according to a contemporaneous memo Donoghue wrote summarizing the conversation. The DOJ provided Donoghue’s notes to the House Oversight and Reform Committee, and they were also obtained by The Times.

According to the report, Rosen and Donoghue pushed back on Trump and told him that “much of the info you’re getting is false” and that his allegations of widespread voter fraud “don’t pan out.” Donoghue went on to write that this came after the DOJ conducted “dozens of investigations” and “hundreds of interviews” related to the allegations and found no evidence of widespread election malfeasance.

Specifically, Rosen and Donoghue told Trump on the call that ballot counting errors in Michigan were a tiny fraction of what he believed, and that allegations of ballot tampering in Pennsylvania and voter fraud in Georgia weren’t supported by any evidence.

Donoghue wrote that he told Trump “DOJ can’t and won’t snap it’s fingers and change the outcome of the election, doesn’t work that way,” the report said.

But Trump resisted, saying that “nobody trusts the FBI” and many Americans are “angry” and “blaming DOJ for inaction.”

“You guys may not be following the internet the way I do,” Trump said, according to Donoghue’s notes.

Former Attorney General William Barr told reporters on December 1, more than three weeks before Trump’s phone call with Rosen and Donoghue, that “we have not seen fraud on a scale that could have effected a different outcome in the election.”

Barr also alluded to Trump and his allies’ repeated efforts to use the DOJ to swing the election in his favor, telling The Associated Press: “There’s a growing tendency to use the criminal justice system as sort of a default fix-all, and people don’t like something they want the Department of Justice to come in and ‘investigate.'”

Rep. Carolyn Maloney, the chairwoman of the oversight committee, said Donoghue’s notes “show that President Trump directly instructed our nation’s top law enforcement agency to take steps to overturn a free and fair election in the final days of his presidency.”

The DOJ turned Donoghue’s notes over to the committee as part of its investigation into Trump’s myriad efforts to use the levers of power to take back the White House after Joe Biden won the presidential election. Despite Trump’s continued insistence that the election was “rigged” and stolen from him, nonpartisan experts and election officials concluded that the 2020 election was the safest and most secure in US history.

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Iranian-American activist at center of kidnapping plot: Iran is ‘scared’ of me

Masih Alinejad sits onstage.
Journalist Masih Alinejad speaks onstage at My Stealthy Freedom during Tina Brown’s 7th Annual Women In The World Summit at David H. Koch Theater at Lincoln Center on April 7, 2016 in New York City.

  • Masih Alinejad, an Iranian-American activist, was recently at the center of a foiled kidnapping plot by the Iranian government, according to the Department of Justice.
  • Alinejad told Insider that learning of the government’s plot to kidnap her made her realize the regime is “scared” of her.
  • “That gives me power,” she said in an interview Wednesday afternoon.
  • See more stories on Insider’s business page.

Masih Alinejad, the Iranian-American activist, who is at the center of an alleged kidnapping attempt by the Iranian government, said the plot to take her showed the regime is fearful of her and others like her.

“It actually shows me the government is scared of me and that our work is effective,” Alinejad told Insider in an interview Wednesday. “It shows you that the women inside Iran sending me videos on a daily basis exposing corruption – the mothers who are actually talking about the brutal regime who killed their beloved ones – they’ve been hurt and that’s made the Iranian government miserable and that’s made them come and try to kidnap me.”

“That gives me power,” she added.

The US Department of Justice on Tuesday revealed the alleged plot to kidnap Alinejad, who had previously spoken out about harassment and intimidation she and her family received from the Iranian government and Iranian state media for her campaigning against the compulsory hijab and other strict modesty laws faced by women in the country.

According to the DOJ indictment, Iranian agents hired a private security company to surveil her Brooklyn home. One of the accused would-be kidnappers reportedly considered kidnapping Alinejad, putting her in a boat, and taking her to Venezuela, which is an ally of Iran, according to the DOJ.

Alinejad said the attempt to kidnap her has made her more “determined” to continue her work.

“I’m a journalist, I’m not a criminal,” she said. “I just give voice to voiceless people. If I stop that I’m going to betray all the people who rely on me.”

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Biden’s executive order aims to stop businesses suppressing workers’ wages

Biden
President Joe Biden.

  • Biden will issue an executive order Friday designed to stop firms collaborating to suppress wages.
  • He will push the FTC and DOJ for tougher guidance to stop companies sharing wage and benefit data.
  • Biden will call on the FTC to ban or limit non-compete agreements, per notes from the White House.
  • See more stories on Insider’s business page.

President Joe Biden is set to crack down on employers who collaborate to suppress workers’ wages in an executive order scheduled for Friday.

The White House published details of the upcoming order Friday morning. Biden will push the Federal Trade Commission (FTC) and the Department of Justice (DOJ) to “prevent employers from collaborating to suppress wages or reduce benefits” by sharing wage and benefit information with each other.

The executive order will say that workers may be “harmed” by existing DOJ and FTC guidance that allows third parties to make wage data available to employers in certain circumstances without triggering antitrust scrutiny, per the White House’s notes.

Workers’ wages tend to decrease when there are fewer employers competing with each other for their labor, according to research from the University of Pennsylvania.

Read more: 20 sought-after female political strategists to watch as more women in the US enter politics

The order, which focuses on promoting economic competition, will aim to help more businesses break into markets dominated by large employers, which it says should give workers more chance to negotiate higher pay.

The president has urged Congress to pass the Protecting the Right to Organize Act, which would include protections for workers who want to unionize and collectively bargain for better pay.

In Friday’s order, Biden will also call for the FTC to ban or limit non-compete agreements and “unnecessary, cumbersome” occupational licensing restrictions. These would make it easier for workers to change jobs and help raise wages, per the White House’s briefing notes.

Tens of millions of Americans, including people working in construction and retail, have to sign non-compete agreements as a condition of getting a job, which makes it harder for them to switch to better-paying options and “stifles” competition, the order will say, per the White House.

It will also say that nearly 30% of jobs in the US require an occupational license, and that there is huge disparity in license requirements between states, which makes it difficult for people to move between states.

Biden has appointed Lina Khan, a vocal critic of big tech, as FTC chair in a decision widely thought to signal his administration’s desire to bring in strict antitrust rules to prevent tech companies from monopolizing markets.

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A judge has ordered Elon Musk’s SpaceX to turn over documents to federal prosecutors investigating alleged hiring discrimination

Elon Musk
Tesla CEO Elon Musk

  • A judge ordered Elon Musk’s SpaceX to give the DoJ its hiring records within 21 days.
  • The DoJ is investigating whether SpaceX discriminates against job applicants based on citizenship status.
  • SpaceX had repeatedly refused to comply with a DoJ subpoena asking for the documentation.
  • See more stories on Insider’s business page.

Elon Musk’s SpaceX must hand its hiring records to the Department of Justice (DoJ) for a probe into whether it discriminates against job applicants based on their citizenship status, a federal judge ruled Wednesday.

SpaceX has repeatedly refused to comply with a DoJ subpoena asking for documents related to its hiring process, saying in February that authorities had given only “the flimsiest of justifications.”

The company now has 21 days to turn in the documentation, US District Judge Dolly Gee ruled.

CNBC first reported on the judgement.

Read more: These are the 5 space companies you might not know yet, but probably should

The investigation started with a complaint a job applicant filed with the Office of Immigrant and Employee Rights (IER), a division of the DoJ, in May 2020.

He was interviewed for a job at SpaceX’s internet project, Starlink, in March 2020, and alleged that it chose not to hire him after asking about his dual Austrian-Canadian citizenship status, per a DoJ court filing. He told CNBC that he wasn’t asked technical questions during the interview.

Under US International Traffic in Arms Regulations, non-US citizens can work for SpaceX if they have a green card.

In a court filing, SpaceX called the case “facially nonsensical.” SpaceX said it knew about his citizenship before offering him the interview, that the interviewer was “unimpressed” by his responses to questions, and that it ultimately didn’t hire anyone for the role.

But IER said that a SpaceX hiring manager wrote on the applicant’s interview feedback sheet: “Not a US citizen which is going to make it hard.”

After a series of IER requests for documents and deadline extensions, SpaceX provided some, but not all, of the documents the IER wanted. SpaceX said providing all documents would be “unduly burdensome” and would involve submitting documents from more than 3,500 employees “from barista to rocket scientist.”

IER obtained a subpoena, which SpaceX refused to comply with. It asked authorities to modify or revoke the subpoena, arguing that it exceeded the scope of IER’s authority and wasn’t relevant to the investigation.

The authorities denied SpaceX’s request in December and ordered SpaceX to comply with the subpoena within 14 days – but SpaceX still refused to send the information. It said it had already spent more than 1,000 hours complying with IER’s requests and said the authorities had given only “the flimsiest of justifications,” calling it “the very definition of government overreach.”

In a court filing in March, a magistrate judge recommended that the district judge force SpaceX to comply with the subpoena, saying that the subpoena was relevant and enforceable. SpaceX objected to the recommendations, but Gee’s court reviewed the case for two months before making its judgement Thursday.

SpaceX, IER, and the DoJ did not immediately respond to Insider’s request for comment outside of normal business hours.

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Cattle markets have been upended, and big meat producers are making 20 times normal margins as beef prices soar

cows beef cattle

Soaring beef prices are making big meatpackers fat and happy while smaller players are left cleaning up the scraps, according to a New York Times story published this week.

As restaurants have reopened and with America’s grilling season underway, demand has upended cattle markets. Futures contracts on ready-for-slaughter cattle have shot up 6.6% year-to-date and 27.7% in the last year. Wholesale beef prices are up 40% since March.

Meanwhile, meat-eaters are already paying 5% more for ground beef and 9% for steaks year-on-year, according to NielsenIQ data cited by the Times.

Elevated demand is bringing on new supply. Second-quarter beef production and beef-cow slaughter rates are up year-on-year, 1.6% and 10% respectively, according to a RaboResearch report. That has partially been driven by drought conditions on the west coast, which have encouraged farmers to cull cows early.

Sizzling demand isn’t the only factor at play, though. Grocers, smaller ranchers, and some members of Congress are alleging that the four biggest meatpacking companies – three of which are US-based – have colluded to tamp down the beef supply, keeping prices artificially high.

Fat margins are breeding suspicion. Cargill, a meat processor and America’s largest private company, is making as much as 20 times normal profit margins per cattle head, according to RaboResearch. Even compared to past periods of pricey beef, Cargill’s margins are still elevated by a factor of six.

One Montana-based small-time rancher told the Times he hasn’t turned a profit in four years – and he blames the big meatpackers. He, like other critics, believes beef supply is being manipulated, likely as a result of non-transparent practices and consolidation in the meat-processing industry.

Antitrust pressure is growing, including from a DOJ probe of the meatpackers’ potential anticompetitive practices. The “big four” processors – which collectively control 80% of the industry – were subpoenaed in the investigation last year, and this May, a bipartisan group of senators encouraged the DOJ to redouble its efforts.

The big four have shown some signs of investing in supply expansion. US-based National Beef is expanding an Iowa-based plant and Brazil’s JBS is investing hundreds of millions in higher wages and more robust facilities, per the Times report.

“We believe our investments in increasing capacity and offering industry-leading wages to attract workers will lead to more opportunities for producers and benefits to consumers,” a spokesman for JBS told the Times.

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How Apple, Google, and Microsoft reacted to Trump-era DOJ subpoenas and requests for data on political rivals and journalists

Apple CEO Tim Cook showing President Donald Trump a computer part.
Apple CEO Tim Cook with former President Donald Trump in 2019.

  • The Trump-era Justice Department requested data from Apple, Google, and Microsoft on his rivals.
  • Rep. Eric Swalwell, whose data was sought, said Trump acted like the “most despicable dictators.”
  • Here’s how each company responded to the legal requests.
  • See more stories on Insider’s business page.

During President Donald Trump’s years in the White House, the Department of Justice requested information from tech companies about his Democrat rivals in Congress and members of the press.

Rep. Eric Swalwell, whose data had been sought, said in a statement on Friday: “Like many of the world’s most despicable dictators, former President Trump showed an utter disdain for our democracy and the rule of law.”

Some of the world’s biggest tech companies – including Google, Apple, and Microsoft – received subpoenas or other record requests for information held by accounts belonging to the press, members of Congress, their staff members, or their families.

This is how each company reacted to those legal requests:

Apple

An Apple spokesperson on Friday said the company received grand jury subpoenas for 73 phone numbers and 36 email addresses, according to TechCrunch’s Zack Whittaker. Apple handed over “account subscriber information and did not provide any content such as emails or pictures.”

The company turned over metadata relating to Swalwell and Rep. Adam Schiff, according to statements from both politicians, who were among Trump’s political opponents.

Apple on Friday told CNBC that the grand jury subpoena included a gag order, keeping Apple from telling customers about the requests. The requests didn’t include information about the investigation, CNBC reported.

Swalwell said he was notified by Apple last month.

“In May, I was notified by Apple that my records were among those sought by – and turned over to – the Trump Administration as part of a politically motivated investigation into his perceived enemies,” he said on Friday.

Google

The Trump administration’s DOJ sought email logs from Google relating to four reporters at The New York Times. That request also came with a gag order, according to The Times. The newspaper reported that “no records were obtained.”

Press Secretary Jen Psaki in a June 5 statement said the White House hadn’t been made aware of the gag order.

“While the White House does not intervene in criminal investigations, the issuing of subpoenas for the records of reporters in leak investigations is not consistent with the President’s policy direction to the Department, and the Department of Justice has reconfirmed it will not be used moving forward,” she said.

Lawyers for the newspaper have filed a request to unseal the Trump-era DOJ filings preceding the data requests, The Times reported this week.

“These orders represent an extraordinary challenge to press freedom, undermining the ability of the press to report truthful information of vital public concern,” the newspaper’s court filing said.

Microsoft

Microsoft in 2017 received a subpoena for a congressional staff member’s personal email account, according to multiple reports. The reports did not identify the staffer.

In a statement sent to The Daily Mail, a Microsoft spokesperson said the company believes “customers have a constitutional right to know when the government requests their email or documents, and we have a right to tell them.”

The spokesperson added: “In this case, we were prevented from notifying the customer for more than two years because of a gag order. As soon as the gag order expired, we notified the customer who told us they were a congressional staffer.”

Insider has reached out to Apple, Google, and Microsoft for additional information.

Schiff on Friday called for an investigation into the Trump-era DOJ by the independent Inspector General, saying it would be “just the start.”

“We need a full accounting of the Trump DOJ’s abuse of power targeting Congress and the press,” Schiff said on Twitter on Friday.

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Apple says it didn’t share pictures or emails from lawmakers’ phones with Trump DOJ under subpoenas seeking to unmask leakers

President Donald Trump sits at a table with Apple CEO Tim Cook, Microsoft CEO Satya Nadella, and Amazon CEO Jeff Bezos.
President Donald Trump meets with members of his American Technology Council, including Apple CEO Tim Cook, on June 19, 2017 in Washington, DC.

  • Apple revealed new details about the Trump DOJ’s subpoena targeting House Intel Committee lawmakers.
  • It told TechCrunch the subpoena included a gag order and “no information” on the DOJ’s inquiry.
  • Apple said it gave “account subscriber information” and no content, “such as emails or pictures.”
  • See more stories on Insider’s business page.

Apple on Friday revealed additional detail about subpoenas it received from the Trump administration’s Department of Justice seeking data about members of the House Intelligence Committee.

Apple told TechCrunch reporter Zack Whittaker the DOJ’s subpoenas sought metadata about 73 phone numbers and 36 email addresses, but that it only disclosed “account subscriber information and did not provide any content such as emails or pictures.”

Apple also told TechCrunch the subpoena was issued by a federal grand jury, included a gag order signed by a federal magistrate judge, and “provided no information on the nature of the investigation,” making it “virtually impossible for Apple to understand the intent of the desired information without digging through users’ accounts.”

“We regularly challenge warrants, subpoenas and nondisclosure orders and have made it our policy to inform affected customers of governmental requests about them as soon as possible,” Apple added, implying the gag order prevented it from informing lawmakers targeted by the subpoenas until recently.

The highly unusual subpoenas issued by the Trump-era DOJ sought data from Apple on at least two Democratic members of the House Intelligence Committee, as well as aides, family members, and even one minor, with the goal of hunting down sources behind news reports about connections between Trump associates and Russia, The New York Times reported this week.

This story is developing. Check back for updates.

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AG Garland defends the DOJ’s decision to endorse controversial Trump-era moves, saying there isn’t ‘one rule for friends and another for foes’

Merrick Garland
Demetrius Freeman/Getty Images

  • AG Merrick Garland defended the DOJ’s decision to back several “controversial” Trump-era decisions.
  • The DOJ’s actions drew sharp criticism from Democrats and Trump critics who demanded transparency.
  • But Garland said on Wednesday that there isn’t “one rule for friends and another for foes.”
  • See more stories on Insider’s business page.

Attorney General Merrick Garland on Wednesday addressed the Justice Department’s decision to back some “controversial” Trump-era decisions, including its move to defend Trump in a defamation lawsuit brought by a woman who accused him of rape, and its move to shield an internal memo related to Trump from the public.

Democrats and Trump critics have sharply criticized the department over those decisions, but Garland said during a congressional budget hearing Wednesday that there is “not one rule for friends and another for foes.”

“The job of the Justice Department in making decisions of law is not to back any administration, previous or present,” Garland told lawmakers at a Senate appropriations subcommittee hearing about the 2022 budget. “Our job is to represent the American people. And our job in doing so is to ensure adherence to the rule of law, which is a fundamental requirement of a democracy or a republic or a representative democracy.”

He went on to note that the foundation of the rule of law “is that like cases be treated alike, there not be one rule for Democrats and another for Republicans, that there not be one rule for friends and another for foes.”

“It is not always easy to apply that rule,” Garland said. “Sometimes it means that we have to make a decision about the law that we would never have made and that we strongly disagree with as a matter of policy. But in every case, the job of the Justice Department is to make the best judgment it can as to what the law requires.”

Garland’s testimony stood in sharp contrast to that of Bill Barr, who made headlines during his tenure as attorney general for going to bat for Trump and frequently turning the department into a mouthpiece for the Trump White House.

One of the episodes at the center of the controversy Garland addressed Wednesday relates to an Office of Legal Counsel memo that Barr used to clear Trump of obstruction-of-justice following Mueller’s investigation.

Barr’s decision ignited a firestorm and accusations that he was shielding Trump from being held accountable for his myriad efforts to obstruct Mueller’s investigation, which were outlined at length in the special counsel’s final report of his findings.

Barr cited the OLC’s memo in a letter justifying his decision-making process in the obstruction investigation. Last month, US District Judge Amy Berman Jackson accused Barr of misleading the public and ordered the Justice Department to release the document in its entirety.

Shortly after, the Justice Department under Garland announced its intention to appeal Jackson’s ruling, saying that “irreparable harm” would be caused by the release of the full document.

It also addressed Jackson’s assessment that the government’s briefs related to the Mueller report and the OLC memo “incorrectly described the nature of the decisional process in which the Attorney General was engaged.”

“In retrospect, the government acknowledges that its briefs could have been clearer, and it deeply regrets the confusion that caused,” the department said in its filing requesting an appeal, adding that government lawyers “did not intend to mislead the Court” and that “imprecision in its characterization of the decisional process” did not warrant the full release of the memo.

The Justice Department’s decision to appeal Jackson’s ruling was one of several that have put it at loggerheads with the Biden White House.

Last week, the department came under fire when it was reported that it continued the Trump administration’s behind-the-scenes efforts to obtain the email logs of several New York Times reporters. After Biden came out in opposition to the practice, the department reversed course and said it would no longer seize reporters’ records.

And earlier this week, the Justice Department again sent shockwaves through legal and political circles when it said it would continue defending Trump in the defamation lawsuit brought by the former columnist E. Jean Carroll, who alleges that Trump raped her.

The White House sharply criticized the decision and confirmed that the Justice Department did not consult it before moving forward.

“While we are not going to comment on this ongoing litigation, the American people know well that President Biden and his team have utterly different standards from their predecessors for what qualify as acceptable statements,” White House spokesperson Andrew Bates said.

C. Ryan Barber contributed reporting.

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The FBI recovered a huge chunk of the Colonial Pipeline ransom by secretly gaining access to Darkside’s bitcoin wallet password

The bitcoin logo is seen on a smartphone screen device in front of a computer screen that says "cancelled. "
The FBI managed to gain access to the “private key” of a bitcoin wallet that the hacking group Darkside used to collect its ransom payments.

The Department of Justice announced Monday that it had recovered a majority of the ransom paid by Colonial Pipeline to hackers who shut down its operations last month and caused massive fuel shortages and price hikes.

The DOJ said that it had recovered $2.3 million worth of bitcoin out of the $4.4 million ransom that Colonial had paid to Darkside, the group behind the hack.

How did the government pull it off?

The FBI had what was effectively the password to a bitcoin wallet that Darkside had sent the ransom money to, allowing the FBI to simply seize the funds, according to the DOJ.

‘Following the money’

Despite cybercriminals’ increasingly sophisticated use of technology to commit crimes, the DOJ said it used a time-tested approach to recover Colonial’s ransom payment.

“Following the money remains one of the most basic, yet powerful tools we have,” Deputy Attorney General Lisa Monaco said in the DOJ’s press release.

Colonial was hacked by Darkside on May 7, and alerted the FBI that same day, according to the DOJ.

On May 8, with its operations knocked offline and amid an emerging gas crisis, Colonial opted to pay the ransom (much to the chagrin of government crimefighters who were simultaneously trying to shut down the hack).

Colonial told the FBI that Darkside had instructed it to send 75 bitcoin, worth about $4.3 million at the time, according to an affadavit from an FBI special agent involved in the investigation.

The FBI agent then used a blockchain explorer – software that lets users search a blockchain, like bitcoin, to determine the amount and destination of transactions – to figure out that Darkside had tried to launder the money through various bitcoin addresses (similar to bank accounts), according to the affadavit.

Eventually, through the blockchain explorer, the FBI agent was able to track 63.7 bitcoin to a single address that had received an influx of payments on May 27.

Fortunately for the FBI, according to the agent’s affadavit, the agency had the private key (effectively the password) for that very address.

Bitcoin addresses rely on a two-key encryption system to keep transactions secure: one public and one private. The public key is shared openly so anybody can send money to that address. But once the sender has encrypted their payment with the recipient’s public key, only the recipient’s private key can decrypt and gain access to that money.

That’s why private keys are meant to be closely held secrets, stored in a secure place. As of January, $140 billion in bitcoin – around 20% of existing bitcoin – were held in wallets where people had forgotten or lost their private keys.

In Darkside’s case, the FBI managed to gain access to its public key, and after getting a seizure warrant from a federal court, the agency used the key to access Darkside’s address and swipe 63.7 bitcoin, or around $2.3 million.

The FBI didn’t say how it had managed to obtain the key, but said it sent a warning to other potential ransomware hackers.

“Ransom payments are the fuel that propels the digital extortion engine, and today’s announcement demonstrates that the United States will use all available tools to make these attacks more costly and less profitable for criminal enterprises,” Monaco said in the release.

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