Busted: Federal Reserve employee mined bitcoin using government server

An ex-employee for the Federal Reserve mined for bitcoin for two years using a government server

Federal Reserve employee mined bitcoin using government server

At least one employee of the U.S. Federal Reserve sees the value of bitcoin and mining for it if you get your computing power for free. Nicholas Berthaume, who is now a former employee, was sentenced to 12 months’ probation and fined $5,000 for installing unauthorized bitcoin software on a Board of Governors of the Federal Reserve System server.

According to a news release by the Office of Inspector General, Berthaume pleaded guilty to one count of unlawful conversion of government property.

Working as a Communications Analyst, Berthaume had access to some Board computer servers. He put the computing power of a federal server to work for him. Mining is costly after all, as nowadays it tends to use more electricity than a miner earns. Unless a person has excess power from a solar farm for mining, then stealing electricity for mining is an option some people choose. You may have heard about the three men and one woman recently arrested in Venezuela for electricity theft and internet fraud.

At any rate, Berthaume chose to install “unauthorized software on a Board server to connect to an online bitcoin network in order to earn bitcoins.” He continued to mine bitcoins on the Fed’s server for over two years, from March 2012 to June 2014.

OIG investigators were unable to tell how many bitcoins Berthaume earned using that server “due to the anonymity of the bitcoin network.” Berthaume didn’t offer up that information either. In fact, he at first denied having any knowledge of the bitcoin mining software.

At some point during his scheme, he also “modified certain security safeguards so that he could remotely access the server from home.” But after already lying about having no knowledge of wrongdoing, Berthaume “remotely deleted the software that he had installed in an effort to conceal his actions.”

Eventually forensic analysis by OIG agents and members of the Federal Reserve System's National Incident Response Team pointed the finger of blame at Berthaume. He was fired from the Board and later admitted his guilt and cooperated in the investigation.

The OIG reported that no Board information was lost due to Berthaume’s actions. The incident was enough for the Board to implement “security enhancements.”

Mark Bialek, Inspector General for the Board of Governors of the Federal Reserve System, wrote:

This case demonstrates how my office will vigorously pursue Board employees who unlawfully abuse their positions and use government property for personal gain. I commend our agents for their diligent work. I also thank the Board's Division of Information Technology for its cooperation and the U.S. Department of Justice's Computer Crime and Intellectual Property Section for its assistance.

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Copyright © 2017 IDG Communications, Inc.

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