Bitcoin has not only changed the economics of cybercrime by providing crooks with an encrypted, nearly anonymous payment system autonomous from any central bank. It’s also changed researchers’ ability to track how much money criminals are making.
“Bitcoin is based on Blockchain, and Blockchain is a public ledger of transactions. So all Bitcoin transactions are public,” explains Mikko Hyppönen, F-Secure’s Chief Research Officer. “Now, you don’t know who is who. But we can see money moving around, and we can see the amounts.”
Every victim of Ransomware — malware that encrypts files and demands a payment for their release — is given a unique wallet to transfer money into. Once paid, some ransomware gangs move the bitcoins to a central wallet.
“We’ve been monitoring some of those wallets,” Mikko says. “And we see Bitcoins worth millions and millions. We see a lot of money.”
Watching crooks rake in so much money, tax-free, got him thinking: “I began to wonder if there are in fact cybercrime unicorns.”
A cybercrime unicorn?
(View this as a PDF)
A tech unicorn is a privately held tech company valued at more than a billion dollars. Think Uber, AirBNB or Spotify — only without the investors, the overhead and oversight. (Though the scam is so profitable that some gangs actually have customer service operations that could rival a small startup.)
“Can we use this comparison model to cybercrime gangs?” Mikko asks. “We probably can’t.”
It’s simply too hard to cash out.
Investors in Uber have people literally begging to buy their stakes in the company. Ransomware gangs, however, have to continually imagine ways to turn their Bitcoin into currency.
“They buy prepaid cards and then they sell these cards on Ebay and Craigslist,” he says. “A lot of those gangs also use online casinos to launder the money.”
But even that’s not so easy, even if the goal is to sit down at a online table and attempt to lose all your money to another member of your gang.
“If you lose large amounts of money you will get banned. So the gangs started using bots that played realistically and still lose – but not as obviously.”
Law enforcement is well aware of extremely alluring economics of this threat. In 2015, the FBI’s Internet Crime Complaint Center received “2,453 complaints identified as Ransomware with losses of over $1.6 million.”
In 2016, hardly has a month gone by without a high-profile case like Hollywood Presbyterian Medical Center paying 40 Bitcoin, about $17,000 USD at the time, to recover its files. And these are just the cases we’re hearing about.
The scam is so effective that it seemed that the FBI was recommending that victims actually pay the ransom. But it turned out their answer was actually more nuanced.
“The official answer is the FBI does not advise on whether or not people should pay,” Sean Sullivan, F-Secure Security Advisor, writes. “But if victims haven’t taken precautions… then paying is the only remaining alternative to recover files.”
What sort of precautions? For Mikko, the answer obvious.
“Backups. If you get hit you restore yesterday’s backup and carry on working. It could be more cumbersome if it’s not just one workstation, if your whole network gets hit. But of course you should always have good, up to date, offline backups. And ‘offline’ is the key!”
What’s also obvious is that too few people are prepared when Ransomware hits.
Barring any disruptions to the Bitcoin market, F-Secure Labs predicts this threat will likely persist, with even more targeted efforts designed to elicit even greater sums.
If you end up in an unfortunate situation when your files are held hostage, remember that you’re dealing with someone who thinks of cybercrime as a business.
So you can always try to negotiate. What else do you have to lose?