Ransomware & Cryptocurrency

Ransomware & Cryptocurrency

As cryptocurrencies spur ransomware, governments rally to seize control with digital currencies

It’s wartime between superpowers and even India is getting sucked into it. The weapons of this newest conflict have changed, as have the soldiers. They now sit for hours in front of their computer screens, using the latest arsenal of cyberweapons created with artificial intelligence (AI), machine learning (ML) to penetrate each other’s digital infrastructure, steal mission-critical information, plant malware, cripple operations, launch deep fakes, or demand ransom to unlock digital assets which they have seized and frozen. These attacks have only intensified over the last few months and, threaten to escalate in the coming days as geopolitical rivalries become ever more vicious, and race for technological supremacy heats up.

Paradoxically, some of the latest technological innovations like cryptocurrencies, that promises to unleash tremendous economic value, have also become the favourite of criminals as means of ransom payment, because of its opacity of ownership of digital wallets into which ransoms are paid. Over $400 million in cryptocurrency value was received by cyber criminals in 2020 as ransom, according to a research by Chainalysis, a blockchain analytics firm.

India tops countries hit by ransomware

While ransomware attacks on US oil pipeline, meat processing units, have grabbed worldwide attention, India tops the list of countries hit by ransomware. Nearly68% of Indian organizations surveyed, were hit by ransomware in the last 12 months. India is one of the most affected countries in terms of ransomware attacks, according to a global survey report “The State of Ransomware 2021”by cybersecurity company, Sophos.

Technology defines geopolitics – ransomware tops agenda

When the US President Joe Biden, sat down across the table with the Russian President Vladimir Putin, in Geneva on June 16, 2021, politics wasn’t too much on the agenda, rather it was mostly about technology; the newest weapon deployed by superpowers to attack each other’s economic assets. Ransomware was on top of the agenda, and Biden delivered a not so veiled threat about targeting Russian infrastructure with cyber-attacks as a tit-for-tat measure.

The US realizes that the biggest threats it faces from rival Russia and China involve technology. While state-sponsored cyberattacks on US infrastructure are being launched by Russian hackers, China is aggressively moving ahead to gain global leadership in artificial intelligence (AI), a lot of it stolen from the US and ironically at times even funded by US investors.

The US is not ‘AI Ready’; seeks global tech talent

The harsh reality pointed out by the US National Security Commission on Artificial Intelligence (NSCAI) is that the US is not ‘AI Ready.’ The US government grasps that it must shore up AI talent through relaxed immigration rules to attract the smartest talent from all over the world to become ‘AI Ready,’ as technology becomes the decisive factor in geopolitical sovereignty.

Found in 2019, the NSCAI, a US government initiative closely linked with its Department of Defense, has underscored that the biggest vulnerability of the country is lack of AI talent. It has recommended that “Congress should pursue a comprehensive immigration strategy for highly skilled immigrants to encourage more AI talent to study, work, and remain in the United States through new incentives and visa, green card, and job-portability reforms.” NSCAI has proposed an elite Digital Corps to be on the trenches in this ongoing cyber war.

Taskforces to battle ransomware

In April this year, the US Department of Justice established a Ransomware and Digital Extortion Task Force to tackle the entire process, including efforts to take down services that “support the attacks, such as online forums that advertise the sale of ransomware or hosting services that facilitate ransomware campaigns,” according to the Wall Street Journal. The European Union also has announced a new task force to tackle the growing threat of cyber-attacks on member states.

Last month, Ireland’s Health Services Executive was forced offline after hackers compromised its servers and stole sensitive patient information. The hackers then demanded $20 million in Bitcoin in exchange for the release of the data, which the Irish government refused to pay. Recent incidents include malicious attacks on the IT systems of French public hospitals and the tampering of vaccine data at the European Medicines Agency.

More than 65 software companies (including some longstanding and fierce competitors), cybersecurity vendors, government agencies from US and European countries, non-profits and academic institutions have joined forces to tackle this insidious threat. Under the moniker of the Ransomware Task Force (RTF), this group of industry leaders has developed a clear, structured set of recommendations that, if resourced and implemented, could rapidly reduce the impact of ransomware on society.

Why cryptocurrency spurred ransomware

The US task force has already had some success. On June 7, the Department of Justice announced that it had recovered 85 percent of the Bitcoin that Colonial Pipeline paid to DarkSide. Nevertheless, the question uppermost in our minds is why is there a sudden surge of ransomware attacks and escalating cyberwar?

The underlying reasons for its recent explosion are simple. Ransomware attacks have become incredibly easy to execute, and payment methods are now much more friendly to criminals. Skills of launching a ransomware or any cyber-attack are easily available online, one can simply buy the software and learn the basics on YouTube tutorials, or by getting help from syndicates like DarkSide — who even charge clients a fee to set them up to hack into businesses in exchange for a portion of the proceeds.

The huge growth in cryptocurrencies has made it super easy for cybercriminals to accept payments. Ransomware victims pay the hacker by sending the money to the digital wallets of the criminal gangs, in exchange of the key to unlock the data. Cryptocurrency is useful for ransomware payments due to its pseudonymous quality; even if you see the final destination wallet into which the ransom payment is deposited, you can’t see who owns or controls the wallet.  This has allowed ransomware attacks to be carried out with relative impunity.  Before the crypto boom, cyber criminals had to resort to huge numbers of pre-paid gift cards in amounts as small as $1,500 for ransom payments — not exactly a perfect system when millions of dollars are at stake.

Hackers have used this leverage to strike harder and more frequently.  The number of ransomware cases reported to the FBI went up by approximately 66% in 2020¸and the average ransomware payment has quadrupled in less than two years, going from $12,000 in Q4 2019 to $54,000 in Q1 2021 A report by blockchain analytics firm Chainalysis noted that although prior to Q1 2020, it never saw a ransomware payment above $6 million, since then it has identified at least one per quarter.

Governments readying to control crypto

This has created a swirl of controversies around cryptocurrencies, as calls for banning it have grown louder. India’s government has yet to pass anti-crypto regulations. However, a draft bill proposing the ban on private cryptocurrencies will soon go before the Indian parliament. One of the reasons is because it believes cryptocurrencies fund illegal activities. However, the government isn’t against digital currencies entirely. It is also looking at its own central bank digital currency (CBDC), the digital rupee.

A slew of crypto-related accounts in China’s Twitter-like Weibo platform has been blocked, as Beijing stepped up a crackdown on bitcoin trading and mining. More actions are expected, including linking illegal crypto activities in China more directly with the country’s criminal law, according to analysts. The Chinese government, meanwhile, is planning its digital currency, or new electronic money, that will be controlled by its central bank. The Voice of America recently broadcast that the US Federal Reserve too is exploring a Digital Dollar. In October last year the European Central Bank (ECB) published a comprehensive report on the possible issuance of a digital euro, prepared by the Euro system High-Level Task Force on central bank digital currency (CBDC) and approved by the Governing Council.

The growing trend seems to be towards a government-controlled cryptocurrency, which would be far less anonymous, to counter the threat of hackers using the technology for ransomware. Governments are keen not to lose out on the innovations around bitcoins and cryptocurrency but trying to find the best way to stop its criminalization. Chairman of the US Securities Exchange Commission, Gary Gensler, who previously taught a course at MIT on cryptocurrency and blockchain, has described himself as an “optimist” on the blockchain technology used to record Bitcoin transactions, saying that he wants it to succeed while protecting financial stability, investors, and consumers. Technology has always presented us with this fascinating paradox of being a double-edged weapon, and the quest to find an answer has spurred even more exciting innovations.

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