Bitcoin criminals forced to adapt due to slide in currency value

27 Apr 15 | Author Fraser Simpson | Headline News Insights & Analysis | Security | Virtual currency

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The falling value of crypto-currency Bitcoin has forced cybercriminals to immediately launder the currency instead of waiting for it to appreciate, IBM has revealed.

Bitcoin is no longer the flourishing currency that it used to be. In December 2013, Bitcoin’s value was at its highest, costing users $1,147 per Bitcoin. Now however, the currency has decreased nearly 10 times in value, costing an estimated $238.

Bitcoin’s anonymity used to be a haven for cybercriminals, with operators using ransomware to obtain Bitcoin from their victims. Once the ransomware malware has infected a person’s PC, their data is encrypted and won’t be unlocked until they pay the operator a ‘ransom fee’, typically in Bitcoin.

Now with the falling value in Bitcoin, cybercriminals are no longer hanging on to the currency. After receiving their ransom money, the malware operators launder their bitcoin almost immediately and convert it into real money using ‘mules’, who transfer the money into a legitimate bank account.

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‘‘I’ve seen this discussion in underground forums among Russian criminals. They use Bitcoin for the money laundering part and take payment with it, but they’ll move it out almost immediately,’’ said Etay Maor, senior fraud prevention strategist at IBM Security in an interview with The Register at the RSA security conference in San Francisco.

‘‘Most of them won’t keep bitcoins – they don’t like the valuations Bitcoin has – so they just use it as a layer of obfuscation, and move it to a different form of money.’

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  Philip Raymond

  in April 28th, 2015 @ 14:30

  The debate about Bitcoin serving as a laundering mechanism for cyber-criminals is a red herring. Bitcoin does not significantly advance the art of obfuscation or anonymity. There have long been digital E-golds and stored value cards that have better immunity from tracking. And they are just as easy to use over the Internet.

  It’s common for crime or vice to drive the early adoption of any technology, especially the ones that usher in a paradigm shift. The problem with linking Bitcoin to crime is that it drives a related debate on transparency, forensics and government oversight. This is a *BAD* association. Transparency should be exclusively elective, being triggered only AFTER a transaction—if and when one party seeks to prove that a payment was made or has a need to discuss a contractual term.

  On the other hand, a good mechanism should render forensic analysis a futile effort if attempted by a 3rd party without consent of the parties to a transaction. We should always resist the temptation to build a “snitch” into our own tools. Such designs ultimately defeat their own purpose. They do not help to control crime—Rather, they encourage an invasive government with its fingers in too many people’s private affairs.

  Here, at CRYPSA, we are building tools that allow Bitcoin users to ensure that both parties can uncover a transaction completely, if they wish. For example, a parent making a tuition payment to a college can prove the date, amount and courses associated with that payment; a trucker or salesman with a daily expense account can demonstrate to his employer that a purchase was associated with food and lodging and not with souvenirs. And, of course, a taxpayer under audit can demonstrate whatever he wishes about each receipt or payment.

  But in every case, the transaction is opaque (and if properly secured, it is completely anonymous) until the sender or recipient chooses to expose details to scrutiny. I will never accept that anonymity is evil nor evidence of illicit intent. Privacy is a basic tenant of a democracy and a government responsible to its citizens. CRYPSA develops tools of transparency, because commerce, businesses and consumers often need to invoke transparency—and not because any entity demands it of them.

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  Bitcoin startup Circle raises $50m from Goldman Sachs and IDG Capital | PaymentEye

  in April 30th, 2015 @ 11:21

  […] clearly using the funding to make bitcoin transactions simple but, more importantly, appealing. The value in Bitcoin recently plummeted to $238, nearly 10 times less than its value in December 2013. It will now carry out instant […]

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