{"id":1630,"date":"2021-06-10T15:57:59","date_gmt":"2021-06-10T19:57:59","guid":{"rendered":"http:\/\/ielrblog.com\/?p=1630"},"modified":"2021-06-10T15:57:59","modified_gmt":"2021-06-10T19:57:59","slug":"cryptocurrency-creates-potential-opportunity-for-both-ransomware-attacks-and-agency-seizures","status":"publish","type":"post","link":"https:\/\/ielrblog.com\/index.php\/2021\/06\/10\/cryptocurrency-creates-potential-opportunity-for-both-ransomware-attacks-and-agency-seizures\/","title":{"rendered":"Cryptocurrency Creates Potential Opportunity for both Ransomware Attacks and Agency Seizures"},"content":{"rendered":"<p><strong><u>By Austin Max Scherer<a href=\"#_ftn1\" name=\"_ftnref1\">[1]<\/a><\/u><\/strong><\/p>\n<p>On June 7, the Justice Department seized much of the ransom that a major U.S. pipeline operator had paid last month to a Russian hacking collective.<a href=\"#_ftn2\" name=\"_ftnref2\">[2]<\/a>\u00a0 This resulted from investigators tracing more than 75 Bitcoins worth as the money moved through a \u201cmaze\u201d of at least 23 different electronic accounts belonging to DarkSide, the hacking group.<a href=\"#_ftn3\" name=\"_ftnref3\">[3]<\/a>\u00a0 DarkSide operated by providing ransomware to affiliates.\u00a0 Iin exchange, DarkSide reaped a cut of the affiliates\u2019 profits.<a href=\"#_ftn4\" name=\"_ftnref4\">[4]<\/a>\u00a0 DarkSide began as an affiliate for another Russian hacking group called REvil, the group that recently used ransomware to try to extort money from JBS, one of the world\u2019s largest meat processors.<a href=\"#_ftn5\" name=\"_ftnref5\">[5]<\/a>\u00a0 Law enforcers viewed this seizure as a warning to cybercriminals that the United States would go after the hackers\u2019 profits, which typically derive from cryptocurrencies.<a href=\"#_ftn6\" name=\"_ftnref6\">[6]<\/a>\u00a0 In addition, law enforcement now hope this recent action will encourage victims of ransomware attacks to notify the authorities to help recover ransoms.<a href=\"#_ftn7\" name=\"_ftnref7\">[7]<\/a>\u00a0 The Federal Bureau of Investigation (FBI) actively discourages ransom payments; however, ransom payments are still legal and they are even tax deductible!<a href=\"#_ftn8\" name=\"_ftnref8\">[8]<\/a><\/p>\n<p><em>Seizure of Ransom Payments<\/em><\/p>\n<p>Law enforcement \u00a0has found a breakthrough due to the fact that, \u201cbitcoin transactions are available on a publicly distributed ledger, in many cases law enforcement can trace bitcoin payments and track stolen funds.\u201d<a href=\"#_ftn9\" name=\"_ftnref9\">[9]<\/a>\u00a0 Furthermore, the FBI was able to obtain the private key for the hackers\u2019 accounts, the key essentially serves as a password which enabled the FBI to move bitcoin out of the wallet.<a href=\"#_ftn10\" name=\"_ftnref10\">[10]<\/a>\u00a0 The seizure itself yielded $2.3 million worth of bitcoin.<a href=\"#_ftn11\" name=\"_ftnref11\">[11]<\/a>\u00a0 The Special Prosecutions Section and Asset Forfeiture Unit of the U.S. Attorney\u2019s Office for the Northern District of California \u00a0is handling the seizure, with significant assistance from the Department of Justice Criminal Division\u2019s Money Laundering and Asset Recovery Section and Computer Crime and Intellectual Property Section.<a href=\"#_ftn12\" name=\"_ftnref12\">[12]<\/a>\u00a0 The task force stated they would prioritize the disruption, investigation, and prosecution of ransomware and digital extortion.<a href=\"#_ftn13\" name=\"_ftnref13\">[13]<\/a>\u00a0 Conversely, the ransomware attacks are generally unsophisticated.<a href=\"#_ftn14\" name=\"_ftnref14\">[14]<\/a>\u00a0 \u201cHackers often use phishing and send employees emails containing suspicious links or attachments.\u201d<a href=\"#_ftn15\" name=\"_ftnref15\">[15]<\/a><\/p>\n<p>This coincided with President Biden\u2019s first foreign trip, as he is expected to discuss the issue with Russian President Vladimir Putin.<a href=\"#_ftn16\" name=\"_ftnref16\">[16]<\/a>\u00a0 Senior Biden administration officials deemed ransomware, as a national threat. \u00a0Secretary of State, Antony Blinken stated the following, \u201cstates cannot be in the business of harboring those who are engaged in these kinds of attacks.\u201d<a href=\"#_ftn17\" name=\"_ftnref17\">[17]<\/a>\u00a0 FBI Director Christopher Wray further emphasized this complaint by stating, \u201cif the Russian government wants to show that it\u2019s serious about the issue, there\u2019s a lot of room for them to demonstrate some real progress that we\u2019re not seeing.\u201d<a href=\"#_ftn18\" name=\"_ftnref18\">[18]<\/a> Antony Blinken and Christopher Wray\u2019s concerns are supported by the fact that, according to Chainalysis, a firm that tracks cryptocurrency payments, victims paid at least $412 million in cyber ransom attacks last year.<a href=\"#_ftn19\" name=\"_ftnref19\">[19]<\/a><\/p>\n<p><em>Biden Administration Responses<\/em><\/p>\n<p>In response to the series of ransomware incidents, the Biden administration, \u201cannounced that it would require pipeline companies to report significant cyberattacks that the government would create 24 hour emergency centers to handle serious hackings.\u201d<a href=\"#_ftn20\" name=\"_ftnref20\">[20]<\/a>\u00a0 However, even these efforts may not be enough as the FBI emphasized that all government agencies, private sectors, and, \u201ceven the average American.\u201d<a href=\"#_ftn21\" name=\"_ftnref21\">[21]<\/a>\u00a0 It would be quite the optimistic approach for the government to believe that all players in the cryptocurrency world will partake in dismantling these ransomware attacks, so a wait and see approach is best suited for now.<\/p>\n<p>Several government officials have called for action against the ransomware attackers and the foreign states that harbor these attackers.\u00a0 Senator Mark Warner stated the following, \u201cWe must make clear to Russia-and any other adversaries-that they will face consequences for this and any other malicious cyberactivity.\u201d<a href=\"#_ftn22\" name=\"_ftnref22\">[22]<\/a>\u00a0 In addition, Microsoft reported, \u201cthe goal of the hackers was not to go after the aid agency itself, instead, its motivation appeared to be to use emails purporting to be from the U.S. government to get inside groups that have revealed Russian disinformation campaigns, anti-corruption groups and those who have protested the poisoning, conviction and jailing of Russia\u2019s best-known opposition leader, Alexie A. Navalny.\u201d<a href=\"#_ftn23\" name=\"_ftnref23\">[23]<\/a>\u00a0 Furthermore, \u00a0government officials have taken the position that the U.S. response to SolarWinds, a software supply, should have been harsher.\u00a0 \u00a0The question then becomes, how does the U.S. implement a harsher response, and with sanctions applied to Russia already substantial, how much of a role can sanction play? \u00a0One answer is that to be effective, sanctions must be multilateral and well-coordinated.\u00a0 The last four years the U.S. has not coordinated its sanctions. President Biden\u2019s trip to Europe should provide some insight to these inquiries.\u00a0 Another response to ransomware attacks and cybercrimes has been prosecution of the perpetrators.<\/p>\n<p>The current issue of the IELR will have a more comprehensive discussion of the ransomware attacks, the seizure, and implications.<\/p>\n<p><strong><u>\u00a0<\/u><\/strong><\/p>\n<p><strong><u>\u00a0<\/u><\/strong><\/p>\n<p><a href=\"#_ftnref1\" name=\"_ftn1\">[1]<\/a> Rising third year law student, Washington College of Law, American University; M.S., Finance, American Univ; B.A., George Washington Univ.<\/p>\n<p><a href=\"#_ftnref2\" name=\"_ftn2\">[2]<\/a> Katie Benner and Nicole Perlroth, <em>Seizing Money, U.S. Retaliates For Cybercrime<\/em>, N.Y. Times, Jun. 8, 2021, at A1.<\/p>\n<p><a href=\"#_ftnref3\" name=\"_ftn3\">[3]<\/a> <em>Id.<\/em><\/p>\n<p><a href=\"#_ftnref4\" name=\"_ftn4\">[4]<\/a> <em>Id.<\/em><\/p>\n<p><a href=\"#_ftnref5\" name=\"_ftn5\">[5]<\/a> <em>Id.<\/em><\/p>\n<p><a href=\"#_ftnref6\" name=\"_ftn6\">[6]<\/a> <em>Id.<\/em><\/p>\n<p><a href=\"#_ftnref7\" name=\"_ftn7\">[7]<\/a> <em>Id.<\/em><\/p>\n<p><a href=\"#_ftnref8\" name=\"_ftn8\">[8]<\/a> <em>Id.<\/em><\/p>\n<p><a href=\"#_ftnref9\" name=\"_ftn9\">[9]<\/a> Sadie Gurman, David Uberti, and Dustin Volz, <em>Pipeline Ransom Money Seized By U.S.<\/em>, Wall St. J., Jun. 6, 2021, at A1.<\/p>\n<p><a href=\"#_ftnref10\" name=\"_ftn10\">[10]<\/a> Ellen Nakashima, <em>Authorities recover about $2 million paid in ransom to pipeline hackers<\/em>, Wash. Post, Jun. 8, 2021, at A18.<\/p>\n<p><a href=\"#_ftnref11\" name=\"_ftn11\">[11]<\/a> <em>Id.<\/em><\/p>\n<p><a href=\"#_ftnref12\" name=\"_ftn12\">[12]<\/a> <em>For Immediate Release: Department of Justice Seizes $2.3 Million in Cryptocurrency Paid to the Ransomware Extortionists Darkside<\/em>, Dept. of Justice, Jun. 7, 2021, <a href=\"https:\/\/www.justice.gov\/opa\/pr\/department-justice-seizes-23-million-cryptocurrency-paid-ransomware-extortionists-darkside\">https:\/\/www.justice.gov\/opa\/pr\/department-justice-seizes-23-million-cryptocurrency-paid-ransomware-extortionists-darkside<\/a> (last visited Jun. 10, 2021).<\/p>\n<p><a href=\"#_ftnref13\" name=\"_ftn13\">[13]<\/a> <em>Id.<\/em><\/p>\n<p><a href=\"#_ftnref14\" name=\"_ftn14\">[14]<\/a> Rachel Lerman, <em>Meat supplier JBS paid $11 million in ransom after hackers targeted plants<\/em>, Wash. Post, Jun. 10, 2021, at A22.<\/p>\n<p><a href=\"#_ftnref15\" name=\"_ftn15\">[15]<\/a> <em>Id.<\/em><\/p>\n<p><a href=\"#_ftnref16\" name=\"_ftn16\">[16]<\/a> Nakashima, <em>supra <\/em>note 10.<\/p>\n<p><a href=\"#_ftnref17\" name=\"_ftn17\">[17]<\/a> Benner and Perlroth, <em>supra <\/em>note 2.<\/p>\n<p><a href=\"#_ftnref18\" name=\"_ftn18\">[18]<\/a> <em>Id.<\/em><\/p>\n<p><a href=\"#_ftnref19\" name=\"_ftn19\">[19]<\/a> Nakashima, <em>supra <\/em>note 10.<\/p>\n<p><a href=\"#_ftnref20\" name=\"_ftn20\">[20]<\/a> Benner and Perlroth, <em>supra <\/em>note 2.<\/p>\n<p><a href=\"#_ftnref21\" name=\"_ftn21\">[21]<\/a> <em>Id.<\/em><\/p>\n<p><a href=\"#_ftnref22\" name=\"_ftn22\">[22]<\/a> Nicole Perlroth and David E. Sanger, <em>Calls for Action Against Russia for Cyberattack<\/em>, N.Y. Times, May. 29, 2021, at A1.<\/p>\n<p><a href=\"#_ftnref23\" name=\"_ftn23\">[23]<\/a> <em>Id.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>By Austin Max Scherer[1] On June 7, the Justice Department seized much of the ransom that a major U.S. pipeline operator had paid last month to a Russian hacking collective.[2]\u00a0 This resulted from investigators tracing more than 75 Bitcoins worth as the money moved through a \u201cmaze\u201d of at least 23 different electronic accounts belonging [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[13,33,45,162,36,98,164,153,88,77,4,3,11],"tags":[],"class_list":{"0":"post-1630","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-international-administrative-penal-law","7":"category-cybercrime","8":"category-cybercrime-and-cryptocurrency","9":"category-department-of-justice","10":"category-extradition","11":"category-extraterritorial-jurisdiction","12":"category-financial-intelligence","13":"category-illicitfinancing","14":"category-international-cooperation","15":"category-international-criminal-law","16":"category-money-laundering-and-bank-secrecy","17":"category-transnational-corruption-money-laundering-and-asset-forfeiture","18":"category-transnational-organized-crime-cybercrime-narcotics","19":"entry"},"yoast_head":"<!-- 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