For Ransom, Bitcoin Replaces the Bag of Bills
A screengrab of a message sent by a hacker demanding Bitcoins for unlocking encrypted files.
In the old days, criminals liked their ransom payments in briefcases full of unmarked bills. These days, there’s a new preferred method for hostage takers: the virtual currency Bitcoin. In a modern day version of a mob shakedown, hackers around the world have seized files on millions of computers, taken down public websites and even, in a few cases, threatened physical harm. The victims, who have ranged from ordinary computer users to financial firms and police departments, are told that their only way out is through a Bitcoin payment that is sometimes more than $20,000.
One set of attackers, believed to be based in Russia and Ukraine, collected about $16.5 million in Bitcoins in a little over a month, primarily from victims in the US, according to the security firm Sophos.
Criminals like the virtual currency because it can be held in a digital wallet that does not have to be registered with any government or financial authority — and because it can be easily exchanged for real money. At the moment, a single Bitcoin can be sold online or on the street for around $290.
Bitcoin, which was released by an anonymous creator in 2009, has recently been gaining mainstream appeal. Start-ups in the industry have won investments from big names like Goldman Sachs and the New York Stock Exchange, which have praised the technology as a faster, more efficient way to complete financial transactions.
But the proliferation of ransom demands has provided an unhappy reminder of the virtual currency’s continuing appeal to the criminal underworld, long after the authorities shut down the online drug bazaar, Silk Road, where heroin and cocaine were sold using Bitcoin.
The latest reminder of Bitcoin’s underbelly came last week with the arrest of two Florida men. The authorities said victims of malware were steered to Coin.mx, a site run by the two men, to buy the Bitcoins to pay the ransom demanded by the malware. The complaint suggested that the criminals also used the site to launder their proceeds.
A police department in New Hampshire that was hit by CryptoWall in June 2014, refused to hand over the ransom and was able to revert to backup files. But more recently, police departments in Dickson County, Tenn., and Tewksbury, Mass., have said that they chose to pay the roughly $500 ransom rather than deal with the headache of trying to circumvent the hackers.
Beyond these attacks, extortionists went after two longtime Bitcoin advocates last year, threatening to exploit personal information about the men’s families if they did not pay up.
Some leaders in the Bitcoin community have suggested potential ways to fend off the ransom threats, digitally marking any coins used for ransom payments, similar to how dollar bills used in hostage situations are marked with invisible dye.
But such solutions have been held up because of the value that many Bitcoin believers have put in the virtual currency’s unfettered free movement.
NYT: http://nyti.ms/1KNVnTi
