No, Cryptocurrencies Are Not Causing Any Ransomware Epidemic
Vice’s Christian Devolu argues that cryptocurrency has fundamentally changed how cybercrime is carried out. In the past, hackers have used ransomware to extort money from prominent organizations, and now, he says they are asking for crypto as payment. In his words, crypto gave birth to the ransomware epidemic.
Crypto and Ransomware?
The US Department of the Treasury, on the other hand, released a series of reports last month detailing various aspects of money laundering and terrorist financing. Despite the multiple risks associated with illicit financial activities, such as money laundering and ransomware, they still believe that traditional networks and fiat are more common in these areas.
Vice analyzed 40 ransom payments made via money transfers from 2014 to January of this year. Most of the money was sent through Western Union and MoneyGram, with lesser-known companies such as Ria and Wal-Mart handling the transactions.
According to their estimates, Mexican criminal organizations have made around $800 million from kidnapping migrants in the past decade. Money-transfer companies have also been getting a cut in every transaction.
The fees that people pay to be smuggled into the US are often less than they would pay to settle a ransom. American companies also benefit from these deals by making money from the coyotes. The cost of illegally crossing the border ranges from $150 to $15,000. According to estimates by law enforcement agencies and think tanks, the total amount that people pay to smugglers for their illegal activities is around $2 billion annually.
Companies are progressively profiting from the illicit economy by turning a blind eye to the payments made to smugglers and extortionists. They also noted that politicians often fail to acknowledge the role that US companies play in stopping money flow.
Crypto for Money Laundering
The NMFS identified virtual assets as an emerging threat to money launderers due to their increasing sophistication and anonymity. It also warned about the use of DeFi and other anonymity-enhancing technologies.
Aside from being used in financial transactions, virtual assets have also been implicated in various cyber-attacks. Motivated by the volatile cryptocurrency market, fraudsters can use promises of wealth to trick their victims into disclosing their personal information. They then demand payment in virtual assets after carrying out the attack.
The report noted that cryptocurrencies as a money-laundering tool are on the rise. It cited a study by Chainalysis that found that more money was being sent to criminal addresses using blockchain technology in 2021.
Despite the rise of virtual currencies, the US Treasury Department still considers fiat currency the preferred method of money laundering. According to them, the use of virtual assets is far below that of traditional methods. Notably, the share of illegal funds in the market has decreased to an all-time low of 0.15%, according to Chainalysis.
Cryptocurrency: Is it Effective Against Crime?
The report explains that while cryptocurrencies can help users evade financial controls, criminals can also use them. On the other hand, they can also help users hide their assets.
On the other hand, most blockchains, including Bitcoin, use transparent public ledgers to help law enforcers track down criminals. Through blockchain, companies such as Chainalysis can track the Bitcoin used by criminals after ransom payments have been made. They can then help law enforcers recover the funds.
Concerns about the use of crypto in illegal transactions have been raised in recent months. Officials are currently working on ways to prevent Russia from using digital currencies to evade sanctions. Tom Robinson, the CEO of Elliptic, noted that while folks can use cryptocurrencies for sanctions evasion, they aren’t a silver bullet.
