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North Korea Crypto Hacks Motivated by US Sanctions

North Korea Crypto Hacks Motivated by US Sanctions

US intelligence have apparently blamed economic sanctions enforced by the US on North Korea as the primary motivations behind the cryptocurrency-related cybercrimes blamed on North Korean hackers, as reported by local English daily Korea Herald.

Authorities from the Federal Bureau of Intelligence (FBI) reportedly said on Voice of America that the cryptojacking and exchange hacks have been carried out by North Korea to circumvent the sanctions that prevent the country from developing its economy properly. They were at a conference hosted by Aspen Institute, a civil liberties think tank, and blamed North Korean hackers for the hacking of Sony Pictures Entertainment in 2014, the Bangladesh bank robbery in 2016 and the WannaCry ransomware events of 2017.

FBI cyber readiness, outreach and intelligence branch deputy assistant director, Tonya Ugoretz, was quoted:

“Sanctions are having an economic impact, so cyber operations are a means to make money, whether it’s through cryptocurrency mining or bank theft.”

Erin Joe, director of the Cyber Threat Intelligence Integration Center under the US Director of National Intelligence, revealed that US intelligence bodies were cooperating to prevent Borth Korea crypto hacks, which were considered a new type of crime:

“There is a huge effort in the FBI, and also several other entities across government, looking at ways to stop malicious activity (surrounding) cryptocurrency… “It’s relatively a new thing, and it comes with a variety of issues that we need to learn more about and figure out so we can stop malicious behavior related to cryptocurrency and currency going to places where it should not or it’s not supposed to.”

The conference, themed ‘The Challenge of Deterrence in Cyberspace’, had also brought to discussion cyber threats from traditional political opponents of the US, including China, Iran and Russia.

 

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Latest Australian Anti-Encryption Laws Target Tech Whistleblowers

Australia’s latest anti-encryption laws are ruffling feathers among the tech community down under, suggesting they could damage the country’s hi-tech reputation.

On 8 December, Telecommunications and Other Legislation Amendment Assistance and Access Bill 2018 (AA Bill) passed speedily through the Australian parliament.

The new law targets anonymity, allowing the government to force a technical assistance notice (TAN) or technical capability notice on tech firms which divulge certain information to their users.

Under amendment 317ZF, if those contacted by security services disclose this information, they could face 5 to 10 years in prison. Blockchain firms who trade exclusively in privacy will be hardest hit by the new security measures. One business, Loki, is already seeking appeal stating:

“The bill has been poorly covered by the media and the final round of amendments that went into the bill significantly reduced its practical uses for law enforcement agencies. However, it does contain the basis of a system which could be extended in future… The scariest thing about this bill is the penalties given to providers who leak information about the investigation or notice, or refuse to comply with the notice.”

The US implemented similar anti-encryption legislation called “warrant canary” under which the FBI sends out numerous Security Letters every year to internet providers, forums or other websites demanding they reveal the identity of users they suspect of federal crimes.

The Australian legislation according to the government is essentially aimed at alleviating the worldwide threat to police and national security agencies with much of modern communication comprising encrypted messaging platforms that are difficult to intercept and decode.

Despite the success of many cryptocurrency and blockchain startups in Australia, such as the likes of Power ledger and Coinspot, there is a problem with anonymity. Australia has attempted to challenge illegal activity online by banning cash transactions over AUD 10,000 and any greater transactions require exchanges to verify any customer identities which cause suspicion. Exchange giant Coinbase now requires users to upload a valid driver’s license in order to buy and sell crypto.

 

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1Broker to Launch ”Read-Only” Version of Bitcoin Futures After SEC Charges

After the US Securities and Exchange Commission (SEC) filed charges against Bitcoin futures firm 1Broker last week, the website now has plans to re-launch on a ”read-only” basis.

At the time of the SEC filing charges, the US Federal Bureau of Investigation (FBI) seized the website, with customers left without access to their funds. A slight relief came Tuesday in the way of 1Broker’s lawyers recommending that the brokerage website can go back online in a read-only format, meaning that customers can view balances and transaction history but cannot pursue any active trades or retrieve funds.

1Broker has been adamant that customers funds remain safe despite the legal action taken against them, saying that its top priority is allowing customers to withdraw from their accounts.

A post on parent company 1Pool’s website outlining the current situation of the company details its priority to protect customers and retrieving their funds: ”The company holds enough funds to cover all withdrawal requests, of course. Before we can take the required steps to do that, we have to seek permission from the authorities.” Balances will have to be paid out via an alternative domain also, its message reads.

CEO of 1Broker Patrick Brunner spoke to CoinDesk on the subject, saying that the company is asking for patience while the process transpires. “Unfortunately, such matters take some time – from our point of view, we are ready to process withdrawals right now,” Brunner told CoinDesk.

The read-only version of the website is expected to go live today on Wednesday.

The charges

The SEC claims that 1Broker violated federal law by allowing US traders to exchange on its platform.

An FBI agent created an account on 1Broker and made a purchase of what they claim are classified as securities, for which the company does not hold the correct licenses from the SEC. The FBI cited an additional grievance in that 1Broker only required an email address and username to open an account – a lack of any know-your-customer compliance.

 

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US Spent Over $5 Million on Blockchain Espionage in 2018

The United States government has spent USD 5.7 million with blockchain analytics firms so far in 2018 and this spending is accelerating, according to a report by digital currency publication Diar. Blockchain analytics firms are paid to conduct blockchain espionage, for criminal prosecution, taxes, and to ensure crypto regulations are being followed.

Bitcoin has a public blockchain ledger, where every transaction and address can be viewed by anyone. Firms like Chainalysis, Elliptic, CipherTrace, Scorechain, Coinfirm, Blockchain Intelligence Group, Bloq, and DMG Blockchain Solutions have developed advanced software which can attach identities to Bitcoin transactions, and transactions for other cryptocurrencies as well. The biggest customers of these firms are banks and financial institutions, who use blockchain analytics to ensure no breach of know your customer (KYC) or anti-money laundering (AML) policies. Collectively, the major blockchain analytics firms listed have received USD 28.8 million of contracts.

The Internal Revenue Service (IRS) is the biggest spender relative to other US government agencies at USD 2.19 million. The IRS is in charge of taxes in the United States, and it seems it is using the most advanced blockchain tracing technology people to build cases against crypto users who are not paying taxes. This despite members of the United States congress requesting that the IRS make its crypto tax guidelines clearer, since at this point the crypto tax code issued by the IRS is so unclear, prohibitive, and arduous that most crypto users don’t know how to pay crypto taxes.

The second biggest government spender is Immigrations and Customs Enforcement (ICE) at USD 1.54 million. This is probably because the ICE seizes drugs and other illegal goods at customs, and sometimes these packages are linked to crypto payments done over the darkweb.

The Federal Bureau of Investigations (FBI) takes third place in spending with USD 1.14 million, and this is probably related to crypto activity associated with criminal suspects and crime organizations. The Drug Enforcement Agency (DEA), in fifth position with USD 0.22 million, probably uses blockchain analytics firms for the same reasons the FBI does. The FBI and DEA can actually use blockchain analytics data in court for criminal prosecution.

The Securities and Exchange Commission (SEC) is at sixth place at USD 0.18 million. The SEC is cracking down hard on initial coin offerings (ICOs) and other fraudulent crypto-related securities, so it makes sense they’re spending some money on blockchain analytics. The Commodity Futures Trading Commission (CFTC) spends USD 0.12 million, likely to ensure exchanges are maintaining regulatory compliance, since Bitcoin trading is regulated under commodity laws.

 

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Kiev Wants His Statue, the CIA Is Tight-Lipped. So Who Is Satoshi Nakamoto?

In Ukraine’s Capital, Kiev plans are underway to install a statue of the pseudonymous creator of Bitcoin, Satoshi Nakamoto in the same location where a statue of Russian communist revolutionary Lenin, used to stand, writes CNN.

Father of the Russian nation, Lenin, had stood on the spot until it was torn down by Ukrainians during the 2014 Revolution of Dignity when the government of the day was overturned.

The idea of the erection of a statue to honor Bitcoin’s reputed founder was down to a group known dramatically as the Satoshi Nakamoto Republic. The initial idea is to have a virtual monument on the site which can be viewed using tech such as smartphones and tablets, with an app developed by Raccoon World.

The hope is that an actual statue might one day follow, to be located on Lenin’s empty plinth. The same group is raising a petition to present to Kiev municipal authorities, the Kyiv City State Administration, in the hope a real statue can be mounted at the site.

Satoshi Nakamoto Republic, Andriy Moroz, co-founder of the group, suggested that Satoshi Nakamoto symbolizes the future:

“The monument to Lenin was a symbol of last centuries that had already passed, leaving conflicting feelings in the hearts of people. Satoshi and the decentralization of society are a new era and new opportunities,” Moroz, who also serves as the First Ambassador of the Republic, told Radio Free Europe.

The group’s plans don’t end there, with the announcement that they are looking to establish Satoshi Nakamoto City, which will be located on an island, once a suitable location has been found. Once established they plan to start a blockchain “republic” of their own.

It’s been reported that the Nakamoto statue concept is open for all comers, including at present Beijing, Dubai, New York, and Tokyo.

Only Satoshi Nakamoto can reveal his true identity, or so say Ethereum News, or perhaps the CIA may be helpful. This was certainly the view of Daniel Oberhouse, a Motherboard writer, who actually went to those lengths by asking both the FBI and the CIA if they could shed any light on the enigmatic Bitcoin creators whereabouts.

Rebuffed by the FBI, he did, however, have more success -at least receiving a response- with the US’ own enigma, The Central Intelligence Agency. Unfortunately, the agency was less than helpful:

“The request has been rejected, with the agency stating that it can neither confirm nor deny the existence of the requested documents.”

Apparently such a statement, according to an ex CIA operative, actually has a name and is a procedure used when the agency has no desire to look into a query due to security issues. A rejection of a request on security grounds implicitly suggests that the documents the requester are seeking indeed exist, but to confirm their existence would mandate their disclosure.

It’s called the “Glomar Response.” And for now, the search continues.

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FBI Warns of Crypto Exchange Fraudulent Support Staff

The Federal Bureau of Investigation (FBI) announced last week that a “problematic and widespread scam” using fraudulent cryptocurrency exchange support workers was currently active.

In its 28 March notice, the bureau’s Internet Crime Complaint Center (IC3) stated that consumers had submitted numerous complaints, claiming losses of USD 11 million connected to tech fraud in 2017. The statement went on to indicate that it was often individual investors who were targetted by the scammers. Individual losses were often in the thousands of dollars.

In a typical scam, the fraudulent support worker asks for access to an individual’s wallet having posted a fake support number online. The scammer then posts the funds to another “temporary” wallet. The virtual currency is never returned to the customer.

Recent moves by some search engines and social network companies including Google to ban cryptocurrency advertising were initiated in part to alleviate similar problems. The FBI warned that scammers will use exhaustive means to locate and target individuals and companies. The IC3 reported receiving an average of 800 complaints a day in the United States on one particular scam site. It also suggested that scams are heavily underreported.

FBI agent Eimiller reported that one scam can represent only 15% of active scams at one given time: “If only one percent of people send money to them, there’s no overhead for them. That is money is in the bank.”.

Some precautionary tips

Be especially wary of offerings where a digital currency is below its market price, double check using reputable sources such as CoinMarketCap.

1. Check URLs and web addresses carefully to avoid being taken to a copy of an otherwise trustworthy site and bookmark these for future use. Look for a small spelling difference which can be a giveaway.

2. Some wallets have been created by scammers. Always use wallets recommended by the developers of a cryptocurrency and downloaded from the official source.

3. In general, don’t send cryptocurrency to random people over the internet unless you are donating or paying for a service which you have checked is reputable.

The FBI’s IC3 site includes a news and press room dropdown where warnings about current scams are listed. This includes a section for internet crime complaints.

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