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IronKey Bitcoin Wallet Hacked: Why Won’t Stefan Thomas Get His $240M in BTC Back? 

Published October 26, 2023 2:46 PM
James Morales
Published October 26, 2023 2:46 PM
Key Takeaways
  • Unciphered claims to have developed a method that can crack into IronKey encrypted hard drives.
  • The company now wants to demonstrate its technique on a drive owned by former Ripple CTO Stefan Thomas.
  • Thomas famously lost the password to his IronKey, which contains the keys to BTC worth around $240M today.
  • So why has he declined Unciphered’s offer?

Imagine leaving $240M in a safe only to forget the combination. Now imagine that the safe explodes destroying whatever’s inside it after ten failed attempts at the code. Former Ripple CTO Stefan Thomas found himself in precisely this situation when he forgot the password to an IronKey encrypted hard drive that held the private keys to a crypto address containing 7,002 BTC.

Now, more than a decade since his story was first publicized, Unciphered, a company that specializes in helping people just like Thomas, claims to finally have a solution to his exploding safe dilemma.

No Back Door To IronKey Encryption

First developed thanks to a $1.4 million grant from the Department of Homeland Security, IronKey drives are used by government and military officials, intelligence agencies, private businesses, and anyone in possession of valuable secrets for whom data security is tantamount.

Given the USB drives’ reputation for strong encryption, they have also proven popular among cryptocurrency investors like Thomas, who use them to protect their keys from prying eyes.

Back in 2021, a spokesperson for Kingston Technology, the company that makes IronKeys, confirmed to TechRadar that even they couldn’t help Thomas recover his private keys.

A company spokesperson explained that Kingston’s complete range of encrypted USB flash drives permits a maximum of 10 password attempts. Beyond this limit, the encryption key erasion occurs, making the data irretrievable. Thomas has already made 8 unsuccessful attempts to guess the code.

“There is no backup password or alternative method, other than the original password that was set up by the user to retrieve the data,” the Kingston spokesperson said.

Unciphered Wins Race To Crack Digital Safe

Since the company was founded in 2021, Unciphered has already made a name for itself by cracking into popular crypto hardware wallets, including the OneKey  and Trezor T models. 

But if breaking into those devices was impressive, there’s a reason the team dubbed their efforts to crack the IronKey “Project Everest.”

Marking a milestone in the history of digital safecracking, Unciphered now claims to have developed a method that allows it to bypass IronKey’s ten-attempt limit, rendering its encryption susceptible to brute-force attacks.

In an open letter  to Thomas, the firm said its technique is the result of months of research by its team of engineers and cryptographers, who have offered to break into his device and recover the $240M Bitcoin keys.

“We started by reverse engineering all of the inter-chip communication protocols, then the firmware of the controller and cryptographic implementation details, and ultimately pieced together all aspects of how your device works,” the letter stated.

Before reaching out to Thomas, Unciphered first enlisted the help of a Wired journalist to verify that their method worked.

Lo and behold, the company was able to break into an IronKey S200 and gain access to a secret phrase the reporter had stored on the device in order to prove they had done it.

Thomas Declines Offer To Unlock $240M Worth Of Bitcoin

While most people would leap at the opportunity to unlock $240M worth of Bitcoin, according to Wired, Thomas declined the company’s offer before they even got around to discussing fees or commission.

Apparently, the former Ripple CTO has already made a deal with two other cracking teams and has promised to split a portion of the locked-up Bitcoin between them if they succeed in breaking his IronKey’s encryption. 

For now, it seems as if Thomas is happy to honor his word and wait to unlock his private keys. But his story teaches an important lesson: just because a security challenge is insurmountable today, doesn’t mean it will be forever.

When Thomas was first locked out of his IronKey, the Bitcoin it controlled access to was worth $140,000. No small sum, but significantly less than its current value. Thankfully, he kept the drive safe for all those years and may soon be able to reap the rewards of his patience.

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