Bitcoin tumbles 12% after US authorities claw back most of Colonial Pipeline crypto ransom

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The price of bitcoin tumbled as much as 12% on Tuesday to trade around $31,500 per coin.

The fall may have been a result of security concerns after US authorities clawed back $2.3 million (63.7 bitcoin) of the $4.3 million Colonial Pipeline attack crypto ransom from hackers, according to an affidavit.

The money was recovered by the Department of Justice's recently launched Ransomware and Digital Extortion Task Force.

At a briefing discussing the ransomware attack, FBI Deputy Director Paul Abbate said agents were able to recover a digital currency wallet that "DarkSide" hackers used to collect payment from Colonial Pipeline.

"Using law enforcement authority, victim funds were seized from that wallet, preventing Dark Side actors from using them," Abbate said.

The FBI declined to say exactly how it accessed the bitcoin wallet, but experts say it was unlikely they hacked the wallet with brute force tactics.

April Falcon Doss, the executive director of the Institute for Technology Law and Policy at Georgetown Law, told NPR this was "a really big win" for the government, but noted that no one knows "whether or not this is going to pave the way for future similar successes."

Read more: A TikTok crypto influencer with nearly 600,000 followers explains why bitcoin is at risk of tumbling 30% in the next couple of weeks — and unpacks the tools he uses to determine price predictions

Nine of the 10 biggest cryptocurrencies based on market capitalization were down on Tuesday morning following the news, the exception being a stablecoin pegged to the US dollar. The selloff took roughly $200 billion in market cap from the crypto ecosystem in a day.

In other bearish news, a popular crypto TikTok influencer who goes by Pablo Heman told Insider that bitcoin is at risk of tumbling 30% in the next couple of weeks.

Despite the rough day for bitcoin and cryptocurrency bulls, there were a few bright spots.

First, Coinbase said that institutional investors' crypto holdings surged 170% in the first quarter on its platform. The data marks a very different tone to what Goldman Sachs had said about very few of its fund managers considering bitcoin as a long-term investment.

Second, President Biden's top tech antitrust advisor was also revealed to be a bitcoin bull this week. Tim Wu holds between $1 million and $5 million in bitcoin, according to a new financial disclosure recovered by Politico.

NOW WATCH: A major supplier of fuel to the East Coast has been down following a cyberattack. This animated map shows all the major oil and gas pipelines in the US.

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