Treasury: Victims Paid $590 Million To Ransomware Hackers In First Half Of 2021

Bethany Blankley, The Center Square

After a ransomware attack shut down the Colonial Pipeline jeopardizing much of the eastern seaboard’s access to 100 million gallons of oil a day being delivered from Texas and Louisiana, gas shortages occurred within days and hackers were paid millions of dollars to get the pipeline back up and running.

But that was only one incident of many, according to a recent U.S. Treasury Department’s Financial Crimes Enforcement Network analysis of suspicious activity reports (SARs).

Other sectors that were affected by Colonial Pipeline include legal, insurance and health care. Education and the supply chain for food in the U.S.

The first half of 2021 saw 635 SARs, compared to 458 in 2020.

The ransomware attack victims in the United States paid $590 million to hackers between January and July 2021. This is more than any ransom payment made in 2020.

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According to the Treasury, ransomware payments were linked with more bitcoin transactions than $5.2 Billion worldwide.

In 2021, the average ransomware payment cost per month in America was $102.3million. If the current trend continues, the number of SARs filed in 2021 “are projected to have a higher ransomware-related transaction value than SARs filed in the previous 10 years combined,” the Treasury projects.

The criminal organization that reportedly created the software used to hack Colonial Pipeline “set up a fake company to recruit potential employees,” The Wall Street Journal reported.

The fake cybersecurity organization reportedly used the name Bastion Secure, believed to be run by the “well-known hacking group” Fin7, the Journal reported. Fin7 has reportedly attacked “hundreds of businesses, stolen more than 20 million customer records and written the software used in a hack that disrupted gasoline delivery in parts of the Southeastern U.S.”

Using anonymous-enhanced cryptocurrencies as well as “mixing services and decentralized exchanges to convert proceeds” is how they have been able to divert funds without being detected.

Andrew Lipow, CEO of Houston-based Lipow Oil Associates LLC, told The Center Square, “The anonymity of a digital currency has allowed ransomware attacks to flourish. If you can’t follow the money today, regulators need to either ban the digital currencies or implement regulations that enable the identification of people and accounts involved in these transactions – just like they would do for a real bank.”

Ransomware attacks are carried out using encrypted technology whereby a hacker breaks into a victim’s computer system and shuts down operations in order to “hold hostage” the victim unless they pay a ransom.

“Some ransomware actors have diversified their revenue streams using a ransomware-as-a-service business model in which ransomware creators sell user-friendly ransomware kits on the Dark Web or outsource ransomware distribution to affiliates in exchange for a percentage of the ransom. This lowers the technical expertise needed to carry out an attack,” the Treasury report states.

U.S. cybersecurity companies filed the largest number of SARs. Banks and cryptocurrency exchanges submitted roughly one-third.

U.S. senator Elizabeth Warren, D-Conn. has warned of the dangers associated with an unregulated crypto-market. She urged Janet Yellen (Treasury Secretary) and Gary Gensler (SEC Chairman), to examine ways of regulating it in July.

She wrote Gensler that nearly 7,000 victims of cryptocurrency scams reported losses totaling $80 millions between October 2020 and March 2021.

“While demand for cryptocurrencies and the use of cryptocurrency exchanges have skyrocketed, the lack of common-sense regulations has left ordinary investors at the mercy of manipulators and fraudsters,” Warren wrote. “These regulatory gaps endanger consumers and investors and undermine the safety of our financial markets. The SEC must use its full authority to address these risks, and Congress must also step up to close these regulatory gaps and ensure that every investor has access to a safe cryptocurrency marketplace.”

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Gensler replied that the U.S. needs “additional authorities to prevent transactions, products, and platforms from falling between regulatory cracks,” “more resources to protect investors in this growing and volatile sector,” and Congress should prioritize legislation to focus on crypto trading, lending and DeFi platforms.

In the Treasury Department’s recently proposed “The American Families Plan Tax Compliance Agenda,” it suggests that any Bitcoin transfer over $10,000 be reported to the Internal Revenue Service. Virtual currencies, which pose a “significant concern,” it states, “have grown to $2 trillion in market capitalization. Cryptocurrency already poses a significant detection problem by facilitating illegal activity broadly including tax evasion.”

The current value of the crypto market is more than 2 trillion dollars. Gemini (a cryptocurrency exchange) reports that approximately 14% of American adults, which is 21 million people, are currently owners of cryptocurrency. The Motley Fool discovered that 50 million Americans are likely to purchase crypto within the coming year in a survey they conducted this year.

The White House expressed interest in the regulation of this industry. The National Security Council and National Economic Council “are coordinating across the interagency to look at ways we can ensure that cryptocurrency and other digital assets are not used to prop up bad actors, including ransomware criminals,” a White House National Security Council spokeswoman said.

The U.S. Department of Justice also announced it was forming a National Cryptocurrency Enforcement Team to “to tackle complex investigations and prosecutions of criminal misuses of cryptocurrency, particularly crimes committed by virtual currency exchanges, mixing and tumbling services, and money laundering infrastructure actors.”

This article was Syndicated by permission of The Center Square.