Sophisticated Crypto Transactions Feed the Rise of Ransomware Attack

The private world of cryptocurrency provides a perfect haven for cyber criminals: as the sophistication of attacks develop, so do the transactions to release funds into cash. George Ralph, Global Managing Director and CRO of RFA, offers insights into the current state of ransomeware and sheds light on some recent develeopments.

There are several drivers fuelling the rise in ransomware attacks over recent months. The sudden and necessary move to Business Continuity Plans and entire workforces logging in from home being a major catalyst for cyber breaches worldwide.

But cryptocurrency has made it much easier for cyber criminals to convert the funds they extract from organisations, leading to the specific rise in ransomware attacks. Crypto is difficult to trace and entirely electronic so it can be completely anonymous. We find ourselves in the unfortunate situation where our networks are harder to secure and the ability to secure and move untraceable funds has got easier.

The rise of ‘ransomware-as-a-service’, an outsourced cyber attack service where large organisations provide their criminal services on behalf of a third party who wishes to launch an attack on their chosen target has added to the ease of launching an attack, too.  REvil and DarkSide being two examples in recent months of this. For a cut of the ransom, the service will launch the attack on your behalf. There is a belief that criminals are actually providing support services to each other via the dark web, creating an outsourced market to rival any other.

Cloud services, ransomware software, data: all are available for a cut of the final ransom payment. It sounds like a mirror of the outsourced IT model that many funds use on the right side of the law.

Once a successful attack has been carried out, the next challenge for the criminal gangs is how to turn crypto funds into hard cash.  Smaller amounts can often be filtered through online gambling sites that accept crypto or released via ‘crypto cashpoints’, ATM’s that will exchange crypto for cash. Of course, as technology to fight cyber-attacks delivers even better results, so does the technology used by the hackers to access networks. And so does the technology used to keep the digital assets secure and private.

For example, tools known as ‘tumblers’ take dirty crypto, mix it with clean crypto and release it back into the marketplace, therefore making it nearly impossible for authorities to distinguish legal and illegal transactions. Highly sophisticated ‘privacy wallets’ have tumbling capabilities within them. Chain hopping, where assets are moved at speed across multiple chains, aimed at confusing traceable transactions, is also widely used.

Things are changing however. Exchanges have begun to take regulation more seriously and KYC and AML are on the near horizon for most, if not already in place. There has also been significant interest from traditional funds looking to invest in digital assets, so we are seeing a definite move towards a more accountable asset, at least in major financial centres. This could mean that criminals just move their transactional business to jurisdictions where there is less stringent oversight, like where their overall operations tend to be based.

The majority of cryptocurrency is not used for criminal activity of course. According to an excerpt from Chainalysis’ 2021 report, in 2019, criminal activity represented 2.1% of all cryptocurrency transaction volume (roughly $21.4 billion worth of transfers). In 2020, the criminal share of all cryptocurrency activity fell to just 0.34% ($10.0 billion in transaction volume).  Forensics firms are in high demand as authorities work to quash the dark side of the crypto market, but as one channel gets shut down another opens. We watch with interest to see the direction authorities choose to take.

Photo Credit: “Bitcoin Crypto Coin Stock Photo” by Crypto360 is licensed under CC BY 2.0

•  •  •

George Ralph is Global Managing Director and CRO of RFA. Mr. Ralph is a technology and business leader with a proven track record of strategic alignment, process improvement and guidance. He has extensive delivery and technical experience in the IT sector. An Assessor for the British Computer Society and a Certified IT professional, Mr. Ralph works to ensure that RFA provides its clients with best in class products and services across the alternative investment sector.

This content is for TabbForum Membership members only.
Log In Register
TabbFORUM is an open community that provides a platform for capital markets professionals to share their ideas and thought leadership with their peers. The views and opinions expressed are solely those of the author(s). They do not necessarily reflect the opinions of TABB Group, its analysts, TabbFORUM and its editors, or their employees, affiliates and partners.

Comments

Add a Comment