Cryptocurrency and Financial Crime
“They desire to take what you have, don’t let them have it.”
Do you know that just by playing subtitles of a movie from an unknown subtitle file can leave your system vunerable? A text message can hack your oven? A word file can give root access to cybercriminals? A webcam can be hacked even when your system is switched off? A sound can send a malicious program. Medical devices, cars, baby monitors, ships, airplanes, drones, ATM;s, smart homes as well as other connected devices are hacked every day. An unpatched OS made you weep due to infection by the Wanna Cry Ransomware. Three out of 5 people are affected every second, more than 4,000 cyber attacks are launched on organizations; Wanna Cry Ransomware looted about $4 Billion in Bitcoin from the affected users from 150 different countries. The DA-Vinci-Code for Cyber Crime is Money in an untraceable form.
Money has transformed itself from the barter system to fiat currency now in the era of digital currency. The advance in technology has generated the curiosity to innovate a new medium of payment and transactions. On one hand the need for physical currency is narrowing, however Cryptocurrency as well as virtual currency is widening. The anonymous, quick, seamless and instant transfer of funds has made our lifes easier, but has also given birth to money laundering and financial crimes. The untraceable nature of Cryptocurrency has propelled cyber terrorism and other forms of financial laundering.
Criminals use Cryptocurrency such as Bitcoin to carry out the financing of their illegal activities on the dark net (a part of the internet, hidden from Google search engine. The normal search engine does not index the dark web pages). The dark web has zeta bytes of useful information, resources and research, but it also acts as a breeding ground for cyber criminals. The sale of drugs, banned weapons, stolen financial information or any other illegal activities you could imagine are available on the Dark Web. There are hard-coded criminals hidden in the shade of the dark net. One of the best examples is the ‘silk road’. The FBI seized this website due to all the illigal goods that were being traded for Bitcoin.
Bitcoin is a crypto based digital currency, which is untraceable due to its unbuilt characteristics. The buyer and seller cannot be associated with the transaction confirmed on blockchain.info. The only known detail is the transfer Bitcoin wallet address which doesn’t fulfill any know your customer norms.
Banks conduct their due diligence by completing the „know your customers“ (KYC) formalities, so that they know that the person who they are dealing with is legitimate. In the case of Cryptocurrency the inherited risk of money laundering exists. Cyber Criminals launch vivid types of attacks for financial gains.
The most recent was the WannaCry Ransomware. The Ransomware was developed to exploit the security flaws or vulnerabilities in the Windows operating system. The attack was so severe that it affected almost all countries and millions of users worldwide. The Ransomware encrypted user data and systems so that it becomes useless unless decrypted. One out of thousands of affected users paid a ransom of about $300-$600 in Bitcoin. After the payment was made – most of the data was never restored. That proves how cyber criminals abuse digital currencies or Cryptocurrencies like Bitcoin.
Cryptocurrency records are a ledger of all transactions. The Cryptocurrency ledger shows the transaction records for both, proofs of ownership and proof of transfer in a distributed decentralized manner. The digital currency cannot be regulated. There is no apex body or agency that issues Cryptocurrency. The underlying technology is Blockchain and the base Cryptography is the RSA algorithm.
Cryptocurrency is the future of money. Researchers across the globe are working on digital currency and the underlying technology Blockchain to make the system more robust.
The regulators and central banks fear the unregulated money supply that is leading to criminal activities. Cryptocurrency based investment products in the trillions of dollars are raised in Bitcoin by the venture capital process known as an ICO. Not all of them seem to be legit, but the development trend shows the potential of this technology.
Decentralization will be the future of this technology. The power of decentralization will create a fraud proof system. The possibility of big zero-day does exist, but is now undiscovered. Overall the technology will aid in saving operational costs and lead to better and seamless transactions. The decentralized power of Cryptocurrency will allow us to enter the next era of virtual Payment Systems.
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