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Why hackers are able to steal billions of dollars worth of cryptocurrency

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Why hackers are able to steal billions of dollars worth of cryptocurrency
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Welcome to Cybersecurity 202! If you’re a regular reader, you might have noticed that we’ve had a bit of an abbreviated schedule lately, but the noob whose name is at the top of this newsletter now (ahem, that guy from Starks) has been lax to let you know. I’m catching up now: we’ll get back to you on Tuesday.

Below: European lawmakers find out how many EU countries use NSO spyware, and the FTC investigates a crypto hack.

What’s Behind a Cryptocurrency Theft Wilderness

In of them incidents in the past week, hackers have stolen a total of nearly $200 million in cryptocurrency, racking up a record year of $2 billion in industrial losses to thieves and crooks on the Internet.

The Treasury Department also sanctioned an anonymization service this week for his alleged role in laundering billions of cryptocurrency. The agency cited the use of Tornado Cash by hackers to the disguise is from the biggest crypto hack known to datethe $620 million March heist.

So why are these expensive crypto hacks happening? There is no single answer, and there are many reasons to believe that they will continue to occur.

Answer #1: That’s where the money is

The first and shortest major answer may sound sarcastic. This is Willie Sutton’s answer to why he robbed banks: “That’s where the money is.”

The covid-19 pandemic has seen a increase in cyberattacks as good as the proliferation of cryptocurrency wallets, observed Brenda Sharton, Global President of the Privacy and Security Practice at Dechert Law Firm. These two phenomena go hand in hand, she told me.

One specific variety of cryptocurrency technology has proven a particularly ripe target — and increasingly so: cross-chain bridges.

  • My colleague steven zeitchik Explain: “A blockchain bridge allows consumers to exchange crypto from one blockchain to another – say, from bitcoin to ethereum – which makes it vulnerable on what security experts call ‘both sides’, the weaknesses of one or the other blockchain.”
  • Blockchain analytics firm Chainalysis estimated last week that such attacks represent 69% of funds pirates flew this year.

Answer #2: It’s a question of maturity and behavior in the industry

“Fintech is evolving very quickly” Adam Meyer, the senior vice president of intelligence at cybersecurity firm CrowdStrike told me. “It’s a lot of start-ups saying what they say about start-ups: ‘Go fast and break things.’ … Some of the stuff that’s out there is really, really new, and so they haven’t really thought about attack vectors.

The financial industry’s most established siblings of crypto start-ups, banks, are investing deeply in cybersecurity. Bank of America spends over a billion dollars every year on cyber defense, the company’s chief executive said last year. Over hundreds of years, banks have learned to prioritize security of all kinds, Scott Carlsonhead of blockchain and digital asset security at Kudelski Security, said.

Additionally, some cybersecurity firms are loath to get involved in the cryptocurrency industry, said Ryan Spanier, Carlson’s Kudelski Security teammate. They might view crypto businesses as a fad, for which it is difficult to adapt existing protections or for an area of ​​the economy that is bad for the environment.

This is not 100% negative news. Several crypto exchanges that have suffered major hacks declined interviews or did not respond to requests for comment, but some directed me to long lists of security improvements they did in stride.

In addition, some technologies are emerging to protect cryptocurrency against theft, like hardware walletsand some older cybersecurity practices have spilled over into the community, like bug bounty programs where ethical hackers help organizations find their weaknesses.

Answer #3: Crypto is the Regulatory Wild West

These traditional financial services companies? They have federal agency overlords – be it the Securities and Exchange Commission (SEC) or the Financial Industry Regulatory Authority (FINRA) – that have made the industry one of the most tightly regulated in terms of cybersecurity. Crypto organizations don’t quite fall under existing regulatory territory, and some argue that’s why they get hacked.

“The reason in the first place is that crypto exchanges, unlike US financial firms, do not have to adhere to the rigorous cybersecurity standards and requirements put in place by the SEC, FINRA and banking regulations,” said an independent consultant. John Reed Stark said. “So you have no idea what kind of cybersecurity protections are in place in these entities.”

By their very nature, the blockchain community prefers to be “lightly regulated because they want to free themselves from what they perceive to be problems in the existing system,” Carlson said.

It’s a hot topic on Capitol Hill, where bipartisan legislation would define who is responsible to oversee the crypto industry and direct agencies to develop cybersecurity rules for digital assets like cryptocurrency. Sens’s bipartisan bill. Kirsten Gillibrand (DN.Y.) and Cynthia M. Lummis (R-Wyo.) Would grant oversight to the Commodity Futures Trading Commission, as opposed to the SEC, which has taken a tough stance against crypto abuse.

But the focus on regulation is misplaced, Sharton said. The government can help better by putting crypto thieves in jail, she said. (In one particular case, a $500 Walmart gift card leads law enforcement to the alleged culprits behind a massive hack in 2016.)

There are also an assortment of other possible explanations.

For years, analysts have tried to find out what is behind the spiral of crypto hacks. Other leads:

What is certain is that crypto hacks are very expensive. Just last month, creditors of former cryptocurrency exchange Mt. Gox said they were close to being reimbursed – fallout from a hack in 2014.

Many EU countries used tech from spyware firm NSO Group, lawmakers say

Law enforcement agencies in 12 of the 27 member states of the European Union use NSO spyware, and ties with two other European countries have been cut, Ha’aretzby Omer Benjakob reports. In total, NSO has 22 European customers, some of whom are from the same country, reports Benjakob.

The discovery of these figures by a committee of the European Parliament investigating the use of NSO and other spyware highlights the extent of the use of these tools on the continent. NSO’s Pegasus spyware has been used to hack journalists, activists and executives, investigation by The Post and 16 media partners finds found.

“If a single company has 14 Member States for its customers, you can imagine the overall size of the sector,” said a member of the committee. Sophie in ‘t Veld Haaretz said. “There seems to be a huge market for commercial spyware, and EU governments are very keen buyers. But they’re very quiet about it, keeping it out of public view.

FTC investigates cryptocurrency exchange hack

The Federal Trade Commission’s investigation into a December 2021 hack of cryptocurrency exchange BitMart represents the first known investigation into cryptocurrency markets by the regulator, Bloomberg Newsis Leah Nylen reports. The FTC disclosed the investigation in an order rejecting an attempt by BitMart operators to block an FTC request for information, which operators Bachi.Tech and Spread Technologies said was too broad and involved information located at ‘foreign.

“The FTC had sent civil subpoenas in May to BitMart operators, asking for details about what the companies told consumers about the security of their crypto assets and how they handled customer complaints. The consumer protection agency – which has penalized dozens of companies from Wyndham Hotels & Resorts Inc. to Uber Technologies Inc. for lax IT practices – expects these details to help it determine whether the companies have engaged in unfair or deceptive business practices. The FTC is also investigating compliance with the Gramm-Leach-Bliley Act, which requires financial institutions to secure important data.

The FTC declined to comment on Bloomberg News. Lawyers representing BitMart operators did not respond to requests for comment from the outlet.

CISA Releases Guide for Election Workers to Address Digital Threats Ahead of Midterm Elections

The Agency for Cybersecurity and Infrastructure Security new tool kit alerts election workers to threats such as phishing and ransomware, State Scoopby Benjamin Freed reports. It comes from the agency’s Joint Cyber ​​Defense Collaborative, an initiative that aims to strengthen the agency’s collaboration with the private sector.

“Much of the recent national discussion on election security has focused on the harassment of election workers, misinformation and disinformation, and insider threats at local election offices – all largely fueled by ongoing lies about the 2020 presidential election,” Freed wrote. “The cyber toolkit, CISA said, is intended to help improve technological resilience.”

Finnish parliament victim of cyberattack following US decision to admit country to NATO (The Hill)

Security firm uncovers flaws in Indian online insurance broker (Associated Press)

7-Eleven Denmark confirms ransomware attack behind store closures (Bleeping Computer)

‘Hack DHS’ bug bounty program to begin second phase with new contract request (NextGov)

Ex-CISA chief wants new cross-cutting agency to run federal cyber (FCW)

  • National Cyber ​​Director Chris Inglis and Director of CISA jen easter talk at the annual DEF CON hacking conference on Friday.

Thanks for reading. See you next week.

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