A former employee of the Federal Reserve, the United States central banking system, was sentenced to 12 months’ probation and fined $5,000 for using Federal servers to mine Bitcoin.
Nicholas Berthaume is a former communications analyst who worked with the Federal Reserve’s Board of Governors, and was responsible for installing unsanctioned software onto a Board server.
According to court documents, he installed the software between March 2012 and June 2014.
Doing so enabled Berthaume to log onto a Bitcoin network where he could mine the digital currency.
Federal Reserve Inspector General Mark Bailek made a statement revealing that Nicholas Berthaume denied installing the Bitcoin mining software in the beginning when he was initially confronted, despite the fact that he had remote access to the federal server from his residence.
He was able to gain remote access by reconfiguring a number of security safeguards.
An investigation was carried out and his involvement was ascertained following a forensic analysis.
It was determined that he proceeded to uninstall the Bitcoin mining software from the Board server remotely once confronted, essentially covering up his tracks by wiping the evidence of his Bitcoin mining venture.
Berthaume was promptly dismissed from his position in the Federal Reserve.
These events necessitated the communications analyst to confess to the offence.
Depending on how much money and resources one is willing to invest, Bitcoin mining can be a very profitable venture.
Ever since the Bitcoin cryptocurrency was developed in 2009, more people have gotten into the business of mining Bitcoin.
However, this is an energy intensive process and most people do not have the necessary resources to conduct Bitcoin mining successfully.
This does not seem to deter some individuals like Berthaume who try to use other party’s resources in their mining endeavors.
On the surface, the mining process is fairly simple.
The Bitcoin network operates by lisiting all transactions made within a set time period.
The lists are called blocks, which are then added to a general ledger forming the blockchain.
Bitcoin miners contribute to the blockchain by ensuring that it stays virtually impossible to compromise.
They do this by applying a mathematical formula to information in the blocks and producing a set of random characters known as a hash.
The hash is essentially a seal that strengthens the blockchain as it validates the previous transactions.
The Bitcoin protocol makes it difficult to create a valid hash, thus miners compete to create them; this is how Nicholas Berthaume was earning his money.
In court, Berthaume entered a plea agreement to a misdemeanor charge for unauthorized use of government property for unlawful purposes.
It is important to note that this charge can warrant fines of up to $100,000 and land the perpetrator a one-year jail term.
Berthaume seems to have gotten a relatively lighter sentence in this regard.
It may be safe to state that the fact that he pleaded guilty was influential in securing his reduced sentence.
He was represented in court by Rebecca LeGrand, who has since not made any comment regarding the case.
According to Inspector General’s statement, the total amount of Bitcoins that Berthaume earned by using the servers could not be conclusively determined; this was largely due to the anonymous nature of the cryptocurrency.
He also added that the matter was quickly resolved due to Nicholas Berthaume’s full cooperation following his confession.
In the wake of these events, The Federal Reserve’s Board of Governors has begun taking the necessary steps to improve the security.
They also assured the public that no information was breached as a result of Nicholas Berthaume’s actions.
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