Saturday

25th May 2019

Criminals prefer virtual currencies

Criminals are using bitcoins and other unregulated digital currencies as a payment method of choice when blackmailing companies following a data breach.

Belgian-based Buy Way Personal Finance told this website on Tuesday (14 May) that it is attacked on a daily basis.

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  • The number of bitcoins is limited to 21 million (Photo: *n3wjack's world in pixels)

But its largest threat came in January when a cyber criminal with the moniker Rex Mundi nabbed the personal details of over 500 potential customers and threatened to dump it all onto the net unless the company forked out €20,000.

The threat posted by Rex Mundi read:

“We have offered Buy Way not to publish this data on this Internet, for a small fee of course. This fee is EUR 20,000.”

Thierry Genard, head of compliance and litigation at Buy Way, said that Mundi had asked to be paid in a digital currency.

“The data which Rex Mundi stole was like a ‘dead’ database that should have been destroyed. Normally, it shouldn’t have existed in our system,” he said.

Buy Way did not pay out the ransom and Mundi says he sold the data to another Belgian company.

“We don’t know if he sold it or not because no customer has contacted us for the moment. It’s impossible to know what has happened to the data,” says Genard.

The Belgian police are pursuing the case but have come up with no leads, he says.

Mundi has hacked the servers at Belgian companies Elantis, AGO Interim, French company Credipret and North-American companies AmeriCash Advance and Drake International.

In April, Mundi resurfaced again when he breached the client database of the Belgian insurance company ARAG.

Bitcoins appeal to criminals because they are anonymous and are not regulated.

The virtual currency combines cryptography and a peer-to-peer architecture and is transferred through a computer or a smartphone without any intermediary financial institution.

The combination means there is no central authority to oversee the transaction making it difficult for law enforcement to track the identities of those who use them.

“Usually in a blackmail situation, the wiring of the money is the biggest risk for the criminals. It’s the only trace for the police to follow and at the end to find the perpetrator. With bitcoins it is much easier to ask for a ransom,” said Ronald Prins at the Dutch-based IT security company Fox-IT.

The company helps authorities improve surveillance, detection and prosecution of cyber criminals.

Prins says people who use digital currencies to launder money or as a payment method are highly organised. The most active, he says, are groups typically found in the Ukraine and in Russia.

“Last year in Holland they stole €35 million,” he said.

He says criminals are now experimenting with bitcoins as a way to transfer money from people’s accounts directly into their bitcoin accounts.

Police investigators specialised in tracking down cyber crime are also uninformed.

“Around 80 percent of the policemen involved now in cybercrime, they don’t even know about the notion of digital currency and bitcoins at all, so there is a big gap between the criminals and the people there to combat them,” he said.

Prins says the digital currencies can also be used to circumnavigate bank withdrawal restrictions like those imposed on Cyprus.

A bailout deal in Cyprus took 60 percent of deposits with over €100,000. People were banned from withdrawing large sums of money.

To get around such restrictions, Prins says the more savvy depositors could purchase the bitcoins in Cyprus and cash them into euros at an airport in Europe.

“It shows that even the regulation doesn’t work anymore if people are smart enough to buy bitcoins and to go around the regulation,” he said.

Advocates for the digital currency say it avoids inflation.

Others, like former Wall Street Stock Exchange investor and bitcoin millionaire Max Kesier has called it the “currency of the resistance”.

But not everyone is impressed.

The bitcoin trading platform Bitcoinica was hacked twice last year and saw the value of the digital currency plummet before regaining later on.

The Electronic Frontier Foundation, a US-based organisation that seeks to defend freedom in the digital world, decided to stop accepting donations in bitcoins.

They noted that the “bitcoin raises untested legal concerns related to securities law, the Stamp Payment Act, tax evasion, consumer protection and money laundering, among others.”

The European Central Bank (ECB) has also expressed some concern.

An ECB report out last year noted that the supply of money for digital currencies does not depend on the monetary policy of any virtual central bank.

While the currency has a finite limit, the legal uncertainty and lack of close oversight, could lead to a high-risk situation, notes the report.

The virtual currency scheme is for the moment used only by a small number of people. Because of it, the ECB says the currencies pose little threat to financial systems but could change in the future if it comes more widespread.

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