With increasing numbers of people being forced to work from home, data suggests that ransomware attacks are at an all-time high with the frequency of these incidents. growing by 45% over the course of April 2021 alone. Not only that, some insist that the rise in ransomware attacks is closely connected to the meteoric growth of the crypto sector.
Furthermore, amid the recent positive cryptocurrency market activity, news from US regulators aggressively studying the link between crypto and ransomware appears to be dampening the mood somewhat, especially as various government agencies apparently they see crypto ransomware as a huge problem that requires rigorous action.
As the adoption of digital assets continues to spread across the US, it appears that lawmakers are looking to better understand how these offerings can be used for a host of legal and illegal purposes. For example, the Ransom Disclosure Act, which was introduced by Senator Elizabeth Warren and Representative Deborah Ross on October 5, requires that victims of ransomware attacks to reveal information on any ransom payments they may have faced with the Department of Homeland Security (DHS).
The goal here, according to Warren and Ross, is to accumulate critical data on fiat and cryptocurrency payments, which can eventually be used by relevant regulatory agencies to protect investors from cybercrime, as well as to curb any illicit financial activity you have. place in the United States. . Additionally, the bill also seeks to investigate the direct role of cryptocurrencies in ransomware attacks, an effort that will be led by the Department of Homeland Security.
Similarly, and recently, Deputy Attorney General Lisa Monaco revealed that the Department of Justice has launched a new initiative called the National Cryptocurrency Enforcement Team that seeks to eliminate any project that may allow criminals to launder their crypto profits. “We want to strengthen our ability to dismantle the financial ecosystem that allows these criminal actors to prosper and benefit from what they are doing,” Monaco was quoted as saying.
What is driving this wave?
To better understand why US regulators are making such a concerted effort to crack down on any crypto-related ransomware, Cointelegraph reached out to Kadan Stadelmann, chief technology officer at open source blockchain solutions provider Komodo.
In his opinion, a quick look at the data available online shows that all kinds, not just cryptography, of ransomware attacks are becoming more and more frequent, and he adds: “Just look at the statistics. Palo Alto Networks reported last month that the average ransom payment for 2021 is currently around $ 570,000, 82% higher than the 2020 average of $ 312,000. 2020 was also much worse than 2019 ”. He added:
“To reverse this trend, a more mature regulatory landscape is needed for the blockchain industry, as well as better cybersecurity as a whole in the next decade.”
When asked if significant spending on such research activities is justified, Stadlemann opined that governments should not only implement more measures, but should also allocate additional funds and resources regarding them. On the subject, he went on to say that governments can start by adopting policies that ensure that businesses and anyone running critical infrastructure are better prepared for such events: “Together, having both proactive and reactive plans for cybersecurity would certainly reduce the consequences of cybersecurity. ransomware attacks. “
Sharing a relatively similar sentiment, Du Jun, co-founder of cryptocurrency exchange Huobi, told Cointelegraph that it is the responsibility of each government to prevent Anti-Money Laundering (AML) as well as Fighting the Financing of Terrorism (CFT) within its borders. , adding that it is only natural that the US government has taken the regulatory steps it has to regulate its crypto market. He added:
“It is difficult to deal with cryptocurrencies as a payment method, given the lack of clarity regarding the responsibility for AML / CFT compliance and the lack of a central supervisory body. These actions may present challenges for crypto companies, but they will be good for the ecosystem in the long term, shielding investors from uncertainty and fostering a better business environment. ”
Lastly, he opined that in addition to oversight only, the US government should also allocate more resources to foster new business growth within this space, making the country more competitive and attractive to crypto enthusiasts.
The expense is justified
Taking a more numbers-oriented approach, Marie Tatibouet, chief marketing officer for cryptocurrency trading platform Gate.io, told Cointelegraph that in 2020, the total ransom paid by victims of cyberattacks reached nearly $ 350 million in cryptocurrencies. . With that figure in mind, he added:
“This number will inevitably continue to increase year after year. So Warren’s ‘Ransom Disclosure Act’ on paper makes sense. If you are a victim, you must disclose information about the ransom payments no later than 48 hours after the payment date. “
With that said, he acknowledged that the main problem most people have with the US government is that lately, Biden and the company have been cracking down on the crypto industry through the introduction of the recent infrastructure bill, as well as other penalties. “So it’s understandable why people have been a bit cautious about everything the government does,” Tatibouet added.
Sergey Zhdanov, COO of digital currency trading platform EXMO, told Cointelegraph that the measures taken by the US confirm the fact that regulatory authorities are not seeking to ban cryptocurrencies (as China did), but rather they want to open a path through which digital assets can be incorporated into the traditional financial system. He then went on to state:
“Creating effective new methods to stop the illegal use of cryptocurrencies and money laundering is a crucial step that will take the crypto industry to its next level of development.”
Is increased regulations good for everyone?
Hunain Naseer, Senior Editor at OKEx Insights, told Cointelegraph that the regulatory efforts that are being launched globally seek to usher in a level of clarity in this space that can help investors enter this space with ease. fast growth. In addition, he expounded on the subject saying:
“It makes sense to focus on initiatives like this that make online interactions and commerce, including cryptocurrency transactions, safer for everyone. These steps will also help regulators allow a wider variety of cryptocurrency-based financial products for retail. “
Nischal Shetty, founder of cryptocurrency exchange WazirX, told Cointelegraph that any regulatory step that seeks to track and eliminate criminal activity should always be welcomed, especially in such a fast-growing industry.
In his view, the reason behind such moves seems to be clearly rooted in governments that ultimately want to protect consumers without stifling innovation, adding: “For cryptocurrencies, it is an even more positive sign, as demonstrates that digital asset innovation can thrive while ensuring that criminal activities are identified and eliminated. “
Additionally, on October 5, blockchain analytics firm Chainalysis announced that it had facilitated the purchase of cybercrime investigation company Excygent for an undisclosed amount, hinting that the purchase will allow the two companies to work together and “dismantle the companies. ransomware operations “that may be active globally. .
In the past, Chainalysis has collaborated with Excygent in seizing cryptocurrencies connected to the now-defunct Silk Road darknet market, as well as shutting down several terrorism and child abuse portals operating online.
In general, crypto native blockchain analytics firms have grown to accumulate support not only from the US government but also from several major private players, and CipherTrace was bought by a main entity, in this case as MasterCard, at the beginning of this year.
What is the future of ransomware crime?
As the crypto landscape continues to evolve and grow, Chainalysis CEO Michael Gronager believes that tracking the flow of ransomware payments on the blockchain will be critical for law enforcement agencies to discourage, analyze, and dismantle any currently existing ransomware operations, as he told Cointelegraph:
“As paradoxical as it may sound, it can actually be beneficial to investigators when bad actors choose to use cryptocurrencies when they commit crimes.”
In this regard, it is pertinent to mention that hackers have come to realize that contrary to what people keep reiterating as crypto is totally anonymous, it is in fact extremely easy to trace individual transactions back to their owners, as all records and transitions are kept on a blockchain.
Also, amidst the myriad of recent stories from big hackers like those related to Poly Network and SushiSwap, what’s interesting is that the incidents did not cause the platform or its users to lose money, as companies and regulators stepped in to ensure the movement of funds through blockchains. And while that may be bad for the notion of decentralization, the fact is that the funds are safe.
Related: Poly Network hack exposes DeFi flaws, but the community comes to the rescue
Gronager further alluded to cases such as NetWalker, a ransomware operator that allegedly targeted hospitals during the pandemic and raised more than $ 25 million in ransom payments in 2020, as well as Suex OTC, a company that allegedly allowed hackers to access. cryptocurrencies sent as payment for ransomware attacks, as prime examples of why a stronger defense against ransomware is needed today.
Therefore, the fact that regulatory agencies are taking decisive steps to focus on crypto ransomware-related initiatives is not unilaterally welcomed by everyone in the crypto industry. While some believe that more can be done to make the digital asset ecosystem more secure for new entrants through the use of regulation, others say that the role of ransomware in cryptocurrencies is overstated and that strict regulation will stifle freedoms. and it will worsen the image of the industry.
However, most agree that ransomware has no place in the industry and that regulation, if done right, will go a long way toward securing the industry and ensuring long-term prosperity and adoption.