As the value of the crypto-currency ecosystem rises, and more firms embrace blockchain’s distributed ledger technology to apply security in other areas, cyber-criminals will increasingly target digital currencies.

Here are five methods by which criminals use bitcoins in their attacks.

1. Taking advantage of insufficient security on the exchange

Currency exchanges will continue to be targeted by cybercriminals.

Coincheck is the most recent and significant exchange hack. Mt. Gox, a Bitcoin exchange, crashed in 2014 after two hacks, the first for almost $9 million in 2011 and the second for a whopping $450 million in 2014. Another exchange, BitStamp, claimed the following year that hackers had stolen its “hot wallet,” or operational cash.

Exchanges are becoming stronger at fighting off hackers because of a greater focus on security, and risk management, as well as more scrutiny by government authorities, according to Flashpoint’s Gray.

“A lot of exchanges are taking security very seriously and developing risk management procedures to better secure their assets,” he added. “Many countries are also taking crypto-currency more seriously, not just by regulating exchanges but also by enhancing anti-money laundering processes and other activities.”

2. Using gadgets as slaves to mine cryptocurrencies

The Berkeley SETI Research Center pioneered the notion of leveraging users’ computers to parallelize the execution of a compute-intensive operation when it released SETI@Home in 1999 to process radio signals from space in search of alien civilizations. The notion was imitated by malicious bot software, which turned hacked systems into massively distributed computers.

The same infrastructure has been replicated by online criminals interested in crypto-currency mining. Illicit cryptocurrency miners penetrate networks, install malware, and run programs on everything from PCs to routers to phones to browsers to crunch the numbers needed to produce tokens in their favorite currency. Attackers have lately exploited vulnerabilities in Apache Struts and Drupal to infect web servers with malicious malware, which frequently tries to infect visitors’ PCs with crypto-mining tools. “While these are the most current vulnerabilities, attackers are agile and will quickly migrate to new vulnerabilities that will allow them to download their crypto-mining tools into vulnerable systems.

3. Stealing of unsecured wallets by virtual pickpocketing

According to Deepen Desai, vice president of security research and operations at Zscaler, the number of crypto-mining payloads has doubled in 2018. but there has also been an increase in malware targeting the wallets used by consumers to store the security keys needed to sign and verify crypto-currency transactions.

Breaking into and stealing from unsecured wallets is analogous to virtual pickpocketing if targeting exchanges is anything like a bank heist.

“With the exponential rise in the value of crypto-currencies, many consumers are engaging in lawful mining activities utilizing their own hardware resources,” Desai added. “On the other side, cyber-criminals are mining on the infiltrated systems and attempting to steal crypto-currency wallets from the users’ computers.” While it is recommended security practice for crypto-currency wallets to keep the bulk of the digital value in offline storage a ‘cold wallet,’ many customers do not follow this recommendation.

4. Helping criminal activity and tax evasion

Criminals are naturally drawn to cryptocurrencies because they provide appealing features such as different degrees of anonymity and the potential to convert processing power into cash. While no one has been able to determine what percentage of crypto-currency transactions are illegal, there are certain indicators. In 2015, an academic study scraped data from prominent Dark Web sites and discovered that 70% of sales were cannabis, ecstasy, and cocaine-related items, with the majority being sold for crypto-currency.

A public-private consortium of government agencies and financial organizations produced a study on crypto-currencies in 2017 that claimed that few consumers uses of crypto-currencies had taken off.

“Despite the constant launch of new crypto-currencies, the crypto-currency payments sector remains modest,” the survey noted. “The number of cryptocurrency users is steadily increasing and developing. The general public’s acceptance of cryptocurrencies, on the other hand, seems doubtful in the near future. “While acknowledging the utility of the technology underlying cryptocurrencies, Larry Fink, CEO of financial giant BlackRock, described them as “more of an index of money laundering than anything else” in January.

Government authorities, on the other hand, are cracking down on using cryptocurrencies for money laundering and tax avoidance. For example, Japan’s Financial Services Agency has put pressure on exchanges to discontinue support for cryptocurrencies like Monero, Zcash, and Dash, which are suspected to be utilized by criminals due to their secrecy features.

The European Parliament decided in April to strengthen virtual currency laws, requiring exchanges to function more like banks and requiring consumer identification.

5. Blockchain infrastructure as a target

Criminals are also figuring out how to take advantage of the distributed ledgers, or blockchains, that cryptocurrencies use to record transactions and offer proof of work to miners.

Members of the Ethereum cryptocurrency community, for example, developed the Decentralized Autonomous Organization, or DAO, in 2016 as a blockchain-based venture capital fund based on a smart contract. However, an attacker could drain nearly $70 million from the contract due to two flaws in its implementation: the DAO permitted recursive calls, and the smart contract decremented money before updating the internal balance.

To remedy the problem, the group launched a contentious “hard fork” of the Ethereum currency, which is comparable to a stock split in that it gives each shareholder two separate shares: Ethereum (ETH) and Ethereum Classic (ETC). In retaliation, attackers slowed transaction processing by launching a distributed denial-of-service assault against the currency’s blockchain.

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