Recovery of Colonial Pipeline ransom funds highlights traceability of cryptocurrency, experts say – Thomson Reuters Institute

The recent seizure by the us. department of justice (doj) of millions of dollars in cryptocurrency linked to ransomware attack on colonial pipeline co. and its subsequent ransom payment in May demonstrated the inherent traceability of cryptocurrencies and the potential of recent law enforcement successes to push criminals to modify their money laundering tactics, experts said.

Indeed, these developments could force ransomware hackers and other criminals to take drastic measures to hide their ill-gotten gains, such as burying cashed-out cryptocurrency money in the ground to make it harder for authorities to trace . added experts.

Reading: Colonial pipeline hackers bitcoin

“i think the seizure of about 85% of the ransom paid for the colonial pipeline highlights us success. uu. law enforcement have been developing the ability to execute these types of complex operations by analyzing blockchains in real time,” said david carlisle, director of policy and regulatory affairs at london-based elliptic, a systems provider risk management for the cryptocurrency industry.

“It also points to the underlying traceability of cryptocurrencies, which can be used as a powerful tool and asset against criminals,” Carlisle explained. “Law enforcement is becoming very adept at using blockchain analytics capabilities to disrupt illicit activity, and this is one of the best examples we’ve seen to date.”

following the crypto breadcrumbs

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On June 7, the Justice Department recovered some $2.3 million in cryptocurrency ransom paid for the Colonial Pipeline, cracking down on the hackers who had launched the most disruptive US attack. recorded cyber attack. On May 19, the CEO of Colonial Pipeline acknowledged to the media that his company had paid a $4.4 million ransom to hackers, as executives were unsure of the seriousness of the hacks. their systems or the time it would take to restore the pipeline.

Announcing the recovery from the doj, deputy attorney general lisa monaco said investigators had “found and recaptured most” of the ransom paid by colonial (seizure of 63.7 bitcoins, now valued at about 2.3 million dollars) after the hacking of their systems last month led to a massive shortage in the us. gas stations on the east coast.

An affidavit filed Monday said the FBI was in possession of a private key to unlock a bitcoin wallet that had received most of the funds. it was unclear how the fbi gained access to the key. Interestingly, bitcoin’s value slid after the fbi seizure, with some experts suggesting that the sell-off was triggered by concerns about the security of the cryptocurrency following police action.

Private sector experts hired by the justice department have proven extremely adept at tracking dirty crypto transfers on the blockchain, highlighted in a series of high-profile cases in the past year.

“We can’t talk about colonial research specifically, but we can say in general that the key to tackling ransomware is to disrupt the ransomware supply chain, including identifying authors and developers, affiliates, infrastructure service providers, washing machines and ATMs. points,” said maddie kennedy, senior director of communications at chainalysis, a New York-based consultancy that enables businesses and government agencies to analyze and investigate cryptocurrency transactions.

hackers can change tactics

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The use of cryptocurrency by ransomware groups for ransom payments “is beneficial for ransomware investigations because cryptocurrency blockchains are transparent and, with the right tools, law enforcement can follow the money on the blockchain to better understand and disrupt the organization’s supply chain and operations,” Kennedy noted.

“This is a proven and successful approach, as we saw in the takedown of the netwalker ransomware strain in January,” he added. “a switch from cryptocurrency to less transparent options could make it harder to investigate ransomware and shut down these operations.”

The recovery of most of the colonial piracy funds may serve as a wake-up call for criminals, Carlisle said. “This incredibly quick and successful response to this incident should act as a powerful warning to cybercriminals everywhere that they are not beyond the reach of law enforcement when using crypto,” she warned. “I suspect we’ll see them adopt more complex money laundering techniques to try to prevent this type of disruption, which is something we’ve seen other criminal networks do when using bitcoin.”

For example, Carlisle said criminals have resorted to some “innovative and even bizarre laundering techniques,” such as money laundering services offered on the dark web that will convert illicit bitcoins into cash and then bury that cash. in some place. for the criminal to dig up.

“These criminals will try to innovate rather than give up their profits,” he added. “That doesn’t mean there won’t be ways to disrupt them, but it does mean that law enforcement agencies and the private sector will need to continue to examine and understand the evolving techniques these groups use to seize their assets. ”

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