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Is Coinbase Closing Accounts For Paying Ransoms With Bitcoins? (coindesk.com)
Even as some comparnies are stockpiling bitcoins so they can quickly pay ransom demands, security firms that try paying those ransoms may face losing their accounts on Coinbase. Slashdot reader Mosquito Bites quotes a report from CoinDesk:
Less than a year ago, Vinny Troia, CEO and principal security consultant of Night Lion Security and a certified white hat hacker, was sent a compliance form by US bitcoin exchange Coinbase, where he had an account. Coinbase wanted to know how Troia was using bitcoin and his account. "I told them I run a security firm. I pay for ransoms and buy documents on the dark web when clients request it," Troia told CoinDesk. The ransoms Troia helps his clients pay are those stemming from ransomware attacks, which have surged in number over the past few years. Many, like the well-publicized WannaCry attack, are asking for bitcoin.
And the documents? Troia said, "We do breach investigations a lot of times. If a fraudster is saying they're selling my client's stolen documents, the only way to make sure they have what they say they have is to buy those documents." According to Troia, Coinbase "did not like that at all." Coinbase then asked the IT expert whether he had a letter from the Department of Justice giving him permission to do those things. No, Troia said. Upon further research, Troia has not found that any such permission exists. But, "I have my clients authorizing me to do this," he said. Coinbase sent Troia back an email explaining that those actions were against the exchange's rules and shut down his account... "My entire family is blocked from Coinbase," he said.
And the documents? Troia said, "We do breach investigations a lot of times. If a fraudster is saying they're selling my client's stolen documents, the only way to make sure they have what they say they have is to buy those documents." According to Troia, Coinbase "did not like that at all." Coinbase then asked the IT expert whether he had a letter from the Department of Justice giving him permission to do those things. No, Troia said. Upon further research, Troia has not found that any such permission exists. But, "I have my clients authorizing me to do this," he said. Coinbase sent Troia back an email explaining that those actions were against the exchange's rules and shut down his account... "My entire family is blocked from Coinbase," he said.
Vote with your feet. There are other exchanges.
Good.
It's because asshole pricks like your clients buy bitcoins, pay the ransom, then go complaining to their bank or credit card provider that the payment was unauthorised or a result of blackmail, and try to do a chargeback against the innocent bitcoin merchant. Or gets them locked out of their accounts while being investigated for fraud.
So you can just fuck off and buy your bitcoins somewhere else.
As discussed here Cyber extortion - legality of ransom payments and the approach of businesses and insurers it shows under international law, cyber extortion payments arent illegal unless they are terrorism related.
I dont believe Coinbase should be denying access to legitimate funds, that arent terrorism related, unless they want to get regulated... this would be the first step to ruining their little monopoly.
It's not a typo if you understood the meaning!
Unless you're going to mine, then you need some way to acquire bitcoin, generally this is by converting fiat currency at an exchange.
Since everything in bitcoin is public, the exchange could easily track what happens to the bitcoins after they leave their wallet.
Coinbase sent Troia back an email explaining that those actions were against the exchange's rules and shut down his account.
That seems reasonable. Coinbase is an american company. There are laws against financing or facilitating the financing of terrorist and/or criminal activities.
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That Coibase is asking for "a letter from the DoJ" seems very strange; especially if this isn't actually obtainable. If I was running a security company that ran into such a requirement, I would immediately engage my legal council...especially if Coinbase closing my accounts actually cost me "real world loss" in the form of me loosing access to my bitcoin wallet stored on their system. Requirements that are impossible to fulfill might constitute fraud, especially if there is a demonstrable "loss of income" due to Coinbase's activities from Troia's (currently) legal activities. Right now, there has only been a (A HREF="https://coincenter.org/entry/it-should-not-be-a-crime-to-help-victims-of-ransomware">single court case in the New York southern district court that has touched on the idea that paying ransom with bitcoin violates 18 U.S.C. 1960.
There are, AFAIK, only two exchanges that 1) mind your privacy, 2) are out of reach of U.S. gov, and 3) comply with regulations for financial institutes, and that's Paymium and Bitstamp in the EU.
Use Coinbase and you risk losing your Bitcoin and your personal detaisl to the U.S. gov.
Security companies should not be allowed to act as front companies for cybercriminals anymore than they should be allowed to assassinate people for pay. Let's hope there's a criminal investigation as well. Perhaps this one was even directly involved in the original crimes, not only encouraging them...
You're not paying attention.
The security company wasn't accepting payment on behalf of ransomware actors. They were facilitating the payment TO ransomware actors on behalf of companies that aren't familiar with bitcoin and have no accounting methodology to make such a payment before the ransomware runs out. They were a front for the victims, not the criminals.
It's akin, in a rough way, to what K&R companies like Control Risk do when it comes to ransoms in the real world. There are right ways and wrong ways to pay a ransom, and they are intimately familiar with the difference. As a result, they step in when one of their clients has a kidnapping situation and manage the whole thing to help get the person back safely. And yes, this usually does involve paying the ransom.
The real motive by Coinbase is probably a fear that they'll be accused of helping facilitate criminal activity. Bitcoin exchanges are on the narrow edge of falling under regulation, but it could also go another way (*cough*Liberty Reserve*cough*) for any particular exchange if the regulators in their country feel that they are guilty of money laundering. As a result, Coinbase is taking proactive measures to be able to prove that they, well, proactively avoid facilitating crime. I don't necessarily agree with it, but I can at least see where it came from.
For your security, this post has been encrypted with ROT-13, twice.
> The real motive by Coinbase is probably a fear that they'll be accused of helping facilitate criminal activity. Bitcoin exchanges are on the narrow edge of falling under regulation,
I suspect that, since many exchanges do facilitate quasi-legal and illegal activity, it's important in business terms for them to avoid any involvement in clearly illegal activity that has the kind of paper trail or provenance that a security firm such as Control Risk might provide. An exchange for an illegal activity, such as laundering money paid for extortion, would seem to make a company ripe for examination by the FCC, the IRS, the FBI for participating in extortion, and the CIA for exchanging in wire fraud helping conceal the identity of the extortionists, and the UN Financial Action Task Force
Yep.
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Why the hell are people paying the ransoms in the first place? This is just encouraging more people to make these types of viruses. Make fucking backups of your shit, fire the moron that unleashed the virus in your network, restore from backup, and carry on with life.
Do you really think they are paying if they have good backups? Or do you expect them to rent a time machine and go back and fix/implement the backups? Yes, they should have good backups but when they don't, and when the documents that get encrypted are make or break for their company (and yes, such a thing does exist) then you pay.
I browse on +1 so AC's need not respond, I won't see it.
Why the hell are people paying the ransoms in the first place? This is just encouraging more people to make these types of viruses. Make fucking backups of your shit, fire the moron that unleashed the virus in your network, restore from backup, and carry on with life.
Do you really have to ask? The number of people who'll just use anything until it breaks without proper maintenance is staggering. I'll gladly admit that while computers is "my thing" there's probably something about some filters on my washing machine or leather care for my couch or oiling the terrace boards I don't do. If you start asking when somebody last checked my electrical system, plumbing etc. I get even more "eh..." and if my car didn't have to be checked every two years by law I'd probably forget all about that too.
Backups are the computer equivalent of painting the garage, it's always almost at the top of your list but mysteriously enough never reaches the top. I finally caved in and decided to hire a maid service not because I can't scrub a toilet but whenever that floated to the top of my TODO list I kept putting it off over and over again. So I understand people, should have had backups. Should have tested the backups. Should have patched Windows. Should have updated their anti-virus. Except they never got around to it.
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In some jurisdictions it is illegal to knowingly do business with criminals... By giving criminals money you are encouraging further crime by demonstrating that crime does pay, and many police forces will come down pretty hard on this.
Obtaining documents that you believe may have been illegally obtained from your clients is also questionably legal, you are collecting evidence which is the job of law enforcement, and there is also the chance that those aren't your clients documents and your obtaining something totally illegal.
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