Hackers Ready to Unlock $235 Million Bitcoin Fortune, If Owner Cooperates

A team of hackers says they have developed a method to decrypt a long lost Bitcoin wallet containing 7,002 bitcoins worth about $235 million. But the wallet's owner remains reluctant to let them try, despite potentially losing access forever.

The Bitcoin are stored on an encrypted USB drive known as an IronKey built by the company Kingston. Its owner, San Francisco crypto entrepreneur Stefan Thomas, lost the password years ago after too many failed password attempts.

Now hackers at a startup called Unciphered believe they can crack Thomas' decade-old IronKey model. After reverse engineering the hardware, they found flaws that allow unlimited password guesses to decrypt the device.

But despite proving their method on other IronKeys, Thomas declined Unciphered's offer of help. He already has handshake deals with two other teams, he says, and wants to give them more time despite little progress.

For cryptocurrency enthusiasts, the locked IronKey represents one of the most tantalizing prizes in the world. Thomas' 7,002 bitcoins date to an early 2011 payment when each bitcoin was worth under $1. Today, they are worth a staggering $235 million.

The mystery of whether Thomas' IronKey is permanently locked has captivated the crypto community for years. Unciphered believes it alone holds the key to finally unlocking the riches.

But Thomas' reluctance to let them try has left the hackers frustrated. "We cracked the IronKey. Now we have to crack Stefan," said Unciphered's Nick Fedoroff. "This is turning out to be the hardest part."

Built for government security agencies, IronKeys use military-grade encryption. But Unciphered discovered cryptographic weaknesses after months studying the hardware. They can now unlock the devices without damaging them.

The team reverse engineered Thomas' exact IronKey model by deconstructing one chip layer by layer. They wiretapped communications to decipher the encryption scheme.

After developing their method, Unciphered offered to help Thomas. But he declined, saying he already had deals with two other teams. Neither has made any known progress yet.

Renowned hardware hacker Chris Tarnovsky confirmed to Wired that Thomas contacted him last year but talks fizzled over payment. It's unclear if the other team Thomas referenced has made any progress either.

Unciphered remains hopeful but frustrated. The hackers say if Thomas won't work with them, they'll move on to other locked wallets.

"When you're dealing with people, that's always the most complex part," said Fedoroff. "Code doesn't change unless you tell it to. But humans are incredibly unpredictable creatures."

For years, Thomas' fortune has tantalized cryptocurrency enthusiasts. His 7,002 bitcoins originated from a 2011 video titled "What is Bitcoin?" that paid him when each coin was worth under $1.

But Thomas lost the IronKey's password years ago, leaving the coins inaccessible ever since. As Bitcoin's value soared, the locked wallet taunted him. "I would just lay in bed and think about it," he told The New York Times in 2021.

Thomas erased two backups of the IronKey. With the password lost, the third copy risks permanently locking after a few more failed password attempts.

Unciphered believes it alone can now rescue the coins. But Thomas remains noncommittal.

After deconstructing the IronKey's chip and deciphering its encryption scheme, Unciphered can brute force passwords. They unlocked a test wallet for Wired using a random passphrase in just 200 trillion attempts.

Despite this proven capability, Thomas turned down Unciphered's offer of help. He already has handshake deals with two unnamed teams, he says, and wants to give them more time.

But experts argue only a small number of specialists worldwide could crack the technology. It's unclear if Thomas' partners have such skills.

Renowned hardware hacker Chris Tarnovsky had preliminary talks with Thomas but wanted payment to start work. He says Thomas stopped contacting him last year.

Unciphered questions if the other team has made real progress either. The hackers believe they alone can decrypt Thomas' IronKey.

But Thomas remains circumspect about his locked $235 million fortune. He cites the complexities of legal contracts when large sums are involved.

After the IronKey, Unciphered now eyes other wallets. "It's frustrating. But humans are unpredictable," said Fedoroff.

Thomas' coins represent the holy grail of lost cryptocurrency riches. But his reluctance to attempt decryption puzzles onlookers.

With Bitcoin's value down significantly in 2022, perhaps Thomas feels less urgency. Or he may have accepted the fortune as permanently inaccessible.

Nonetheless, the encrypted IronKey keeps cryptocurrency enthusiasts transfixed. Unciphered's proven capability to unlock it adds a new wrinkle.

But only Thomas controls access. And for now, the $235 million remains tantalizingly out of reach.