Monday

5th Dec 2022

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.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

  • 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.

Magazine

Digital currency, the Airbnb and Uber killer

The digital currency Ethereum allows people to run so-called smart contracts, potentially creating a decentralised sharing economy, and could be the beginning of the end for firms like Uber and Airbnb.

EU countries struggle to crack Hungary's vetos

Hungary will be in the spotlight on Tuesday as EU governments struggle over suspending EU funds to prime minister Viktor Orbán's government — despite rule of law concerns — and unlock key EU policies which Budapest has been blocking.

EU Commission proposes suspending billions to Hungary

Prime minister Viktor Orbán's government has to implement 27 measures "fully and correctly" before any payment from the €5.8bn recovery fund can be made, or the suspended €7.5bn of cohesion funds can be unblocked.

Catalan spyware victims demand justice

Victims of the widening spyware scandal in Spain are demanding justice and reparations, following the revelations that journalists, lawyers, civil society and politicians had been targeted.

EU Commission to keep Hungary's EU funds in limbo

The EU executive, on the other hand, is expected to approve Hungary's recovery plan, worth €5.8bn, but only would disburse actual money if Hungary delivers on some 27 key reforms.

Opinion

Serbia now has no choice but to join EU sanctions on Russia

Vladimir Putin himself is somewhat suspicious of Serbia's leader, as are most who deal with the opaque Aleksandar Vucic. The Russian president has preferred to keep his Serbian counterpart compliant, via a tight rein of annually-reviewed gas pricing.

Stakeholders' Highlights

  1. Nordic Council of MinistersCOP27: Food systems transformation for climate action
  2. Nordic Council of MinistersThe Nordic Region and the African Union urge the COP27 to talk about gender equality
  3. International Sustainable Finance CentreJoin CEE Sustainable Finance Summit, 15 – 19 May 2023, high-level event for finance & business
  4. Friedrich Naumann Foundation European DialogueGender x Geopolitics: Shaping an Inclusive Foreign Security Policy for Europe
  5. Obama FoundationThe Obama Foundation Opens Applications for its Leaders Program in Europe
  6. EFBWW – EFBH – FETBBA lot more needs to be done to better protect construction workers from asbestos

Latest News

  1. EU countries struggle to crack Hungary's vetos
  2. Frontex expanding migrant route-busting mission in Balkans
  3. EU ministers in fresh battle on joint debt, after Biden subsidies
  4. EU: 'We'll see' if Moscow actually stops selling oil over price-cap
  5. Bad Karma
  6. Serbia now has no choice but to join EU sanctions on Russia
  7. Hungary's funds showdown in focus This WEEK
  8. EU must break Orbán's veto on a tax rate for multinationals

Stakeholders' Highlights

  1. European Committee of the RegionsRe-Watch EURegions Week 2022
  2. UNESDA - Soft Drinks EuropeCall for EU action – SMEs in the beverage industry call for fairer access to recycled material
  3. Nordic Council of MinistersNordic prime ministers: “We will deepen co-operation on defence”
  4. EFBWW – EFBH – FETBBConstruction workers can check wages and working conditions in 36 countries
  5. Nordic Council of MinistersNordic and Canadian ministers join forces to combat harmful content online
  6. European Centre for Press and Media FreedomEuropean Anti-SLAPP Conference 2022

Join EUobserver

Support quality EU news

Join us