A Bitcoin wallet listed in a note claiming to be from Nancy Guthrie’s kidnapper has received a small payment, according to a Tucson, Ariz. television station, thrusting cryptocurrency into the center of a case that has gripped the nation.
The episode highlights why digital currencies have become a common tool in ransom demands, and how difficult they can be to trace.
Several news outlets received a supposed ransom note last week demanding payment to a Bitcoin wallet. One of them, KGUN, a Tucson television station, said on Tuesday night that the wallet had received a payment for less than $300. It remains unclear whether the person who sent the note is actually connected to Ms. Guthrie’s abduction.
Since Bitcoin emerged in 2009, it has become a common payment method in extortion schemes, including ransomware attacks and kidnappings, because it allows transactions to be conducted outside the traditional financial system.
Unlike bank transfers, Bitcoin transactions do not require names or physical locations. They rely instead on a string of characters known as a Bitcoin address.
“The other alternative option that you have if you’re a kidnapper, for example, or you’re engaged in some other form of ransom demands, is you ask for a briefcase brimming with cash to be dropped off somewhere,” said Anton Moiseienko, an associate professor of law at Australian National University.
“But that requires physical contact. Someone needs to leave cash. Someone needs to pick it up. Bitcoin can operate across countries, geographies, continents and so on,” he said.
Tracing a cryptocurrency transfer presents two main challenges: identifying who owns the account and where the money ultimately goes, said Dennis Desmond, a cyber-intelligence lecturer at Australia’s University of the Sunshine Coast and a former F.B.I. special agent.
He likened the challenge to searching for a needle in a stack of needles.
“If the funds are immediately transferred to other wallets, aggregated, consolidated, and then again shipped out to other wallets, or hundreds of wallets in different countries, it’s very difficult to recover those funds,” said Mr. Desmond.
Still, cryptocurrency transfers are not as difficult to trace as criminals may assume. Each transaction is recorded on a publicly viewable ledger known as a blockchain.
The authorities, often working with specialized cryptocurrency-tracking companies, can monitor transactions from a particular wallet and determine whether the money is moved to other wallets or digital exchanges, Mr. Desmond said.
From there, the authorities may be able to gather identifying details, such as associated IP addresses, when a wallet was created and how frequently it has been used.
For example, in 2021, federal officials recovered most of the Bitcoin ransom paid by Colonial Pipeline after a ransomware attack shut down the company’s computer systems, prompting fuel shortages and a spike in gasoline prices. The authorities did not disclose how they retrieved the funds.
Laura Chung is a Sydney-based reporter and researcher for The Times, covering Australia, New Zealand and the Pacific.
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