Rise In Ransomware Attacks Could Pose A Big Risk To Crypto

June 2, 2021 03:00 PM
Crypto Story of the Day

Crypto Story of the Day

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For the most part, crypto was marginally up this morning with the exception of Dogecoin (DOGE), Binance Coin (BNB), and Polkadot (DOT). DOGE was up 30% on the back of news that Coinbase is listing the coin on Thursday.

Crypto Story of the Day

Earlier last month, the Colonial Pipeline came under a ransomware attack that saw the firm pay hackers USD 4.4 million in BTC. The incident came after a report from analytics firm Chainalysis which claimed that ransomware payments in 2020 totaled USD 406 million, up from USD 92 million in 2019.

The Colonial Pipeline, a major U.S. oil artery, suffered a ransomware attack last month. Ransomware attacks typically involve perpetrators that essentially hold a firm’s data hostage in return for payment, usually in crypto. This particular attack took place on May 7 and caused the pipeline to halt operations for days in order to contain the infiltration. 

The shutdown caused widespread interruptions to gas supplies in the Southeastern U.S. and led to emergency meetings at the White House, with President Biden “personally briefed” on the situation daily. 

The FBI identified a ransomware group named DarkSide as the perpetrators of the attack. 

Crypto analytics firm Elliptic claimed to have identified DarkSide’s wallet. According to the firm, the wallet, active since March 2021, received 57 payments totaling roughly 350 BTC, or about USD 12 million based on current prices. 

According to a January report from Chainalysis, 2020 is the “year that ransomware took off.” In that report, it’s stated that the total amount paid in ransomware incidents was USD 351 million in 2020, a 311% increase compared to the year prior. Chainalysis notes that due to the underreporting of such attacks, the precise total is likely higher. 

This year, victims of ransomware attacks include the Washington Police Department, the 3rd police department and 26th government agency affected by such attacks in 2021, according to the New York times. Yesterday, the White House revealed that Brazillian meat packing firm JBS SA had informed the U.S. government that it halted operations due to a ransomware attack. 

At the end of last month, Lee Reigner, Executive Director of the Global Financial Markets Center at Duke Law School, wrote an opinion piece in the WSJ that called for a ban on cryptocurrencies in order to combat ransomware attacks. 

Research from Chainalysis and Elliptic seems to suggest that ransomware technology itself has become more widely available to criminals via “ransomware-as-a-service.” Ransomware events in 2021 seem to have continued the increasing trend that started in 2020. 

Unlike most crypto-related hacks, however, recent ransomware events have had a practical impact on everyday life for Americans. The negative effect of this pattern could eventually drag BTC into broader discussions about the asset as a national security risk at a moment when new rules for the asset class are being considered.

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FRNT Financial is a technology and sales layer that offers institutional and accredited investors access to various forms of exposure to crypto-assets. You can subscribe to FRNT Financial Morning Note at https://www.frnt.io/morningnote