Bitcoin proves the double-edged sword for criminals

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LONDON: Regulators have repeatedly criticized the growth of cryptocurrencies such as bitcoin due to their popularity with criminals, but transparent technology transactions can also work against violators. The lesson is one that was learned the hard way by cybercriminal hackers Darkside after the organization extracted a $ 4.4 million ransom from oil company Colonial Pipeline in bitcoin. Following the ransomware extortion, which forced the shutdown of a major fuel network in the eastern United States last month, the US Department of Justice said it recovered $ 2.3 million funds by tracking financial transactions. “Tracking money remains one of the most basic but most powerful tools available to us,” US Deputy Attorney General Lisa Monaco said on Monday. Financial forensics to track crypto transactions is more complex on decentralized and anonymous networks. For a traditional bank payment, the police can turn to the bank that sent or received the money, but for bitcoin, the ledger that records these transactions – the blockchain – does not ask users to reveal their identity. But the blockchain is also public and available for everyone to download and replenish who might own the anonymous addresses where bitcoin arrives. While some users keep their bitcoin safe in an offline wallet, for example on a USB stick or hard drive, Darkside’s bitcoins were always linked to an online account. Without specifying how they got there – whether through hacking or through an informant – US authorities said they were able to gain access to the “private key” of the hackers’ online account. In 2019, blockchain analysis enabled UK and US authorities to dismantle a child pornography ring and arrest more than 300 people in 38 countries. Complex transaction tracking has become an industry in its own right. Firms specializing in blockchain analysis have developed, such as Chainalysis in the United States and Elliptic in Great Britain. According to a Chainalysis report released in February, cryptocurrency transactions for illegal purposes reached $ 10 billion in 2020, or 1% of total cryptocurrency activity for the year. In 2019, criminal activity using online currencies reached a record high of $ 21.4 billion. The total cost of ransomware payments made in cryptocurrency alone climbed to nearly $ 350 million in 2020. “Cryptocurrency remains attractive to criminals, mainly due to its pseudonymous nature and the ease with which it is used. allows users to instantly send funds anywhere in the world, ”Chainalysis mentioned. Elliptic analysts believe they have identified the bitcoin wallet that received the ransom payment from Colonial Pipeline in Darkside, and have discovered that at least one other payment of $ 4.4 million. More importantly, transaction analysis can identify bitcoin selling platforms that received the ill-gotten funds from the wallet. “This information will provide law enforcement with essential leads in identifying the perpetrators of these attacks,” wrote Elliptic researcher Tom Robinson. Market regulators have put pressure on cryptocurrency exchange platforms. Many, like Coinbase, now require users to reveal their identity before making transactions. But other platforms don’t follow the same rules. Elliptic and Chainalysis highlight the growing role of Hydra, a sales site for Russian-speaking customers, accessible via the darknet, a version of the web not listed on search engines and where users can remain anonymous. “Hydra offers withdrawal services alongside narcotics, hacking tools and fake ID,” Robinson explained. By using sites like Hydra in conjunction with cryptocurrencies, Darkside hackers have reportedly already resold some of the redeemed bitcoins. As the price of bitcoin has skyrocketed in recent months, regulators are adjusting their strategies. The Bank of England said on Monday that payments in stablecoins, fixed-price cryptocurrencies, should be regulated to the same standards as bank payments.

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