Ransomware might not exist without cryptocurrency, senior policeman told MPs

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The ransomware attacks that have hit hospitals, businesses and consumers around the world may not happen if cryptocurrencies were not available, a senior police official advised MPs.

A small parliamentary committee is currently investigating cryptocurrencies, raising the prospect of some form of additional checks.

Detective Inspector Craig Hamilton, national director of the New Zealand Police Financial Crime Group, said some cryptocurrency-facilitated crimes would not happen in their absence, with ransomware being one example. ” classic “.

“In the absence of cryptocurrency, we would potentially not have the ransomware attacks we know around the world,” he told the committee.

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Hamilton testified by video link from Waikato, whose district health board is still recovering from a crippling ransomware attack in May.

Insurance brokerage giant Marsh McLennan estimated that 98% of ransomware requests were made in bitcoin last year because it allowed cybercriminals to receive funds with “a high degree of anonymity.”

This week, the GCSB’s National Cyber ​​Security Center (NCSC) said criminal attacks on major national organizations more than doubled in the year through June, citing ransomware as one of the main threats.

Access to cryptocurrency exchanges provided the infrastructure behind criminal ransomware activity, he said.

“A growing cyber insurance market and larger ransom payments are contributing to increased income for ransomware players, who are reinvesting their income to develop new malware and find new targets,” NCSC said.

The increased use of cryptocurrencies has also allowed cybercriminals to launder their proceeds of crime, “often without detection,” he said.

California-based research firm Cybersecurity Ventures estimated in June that the global cost of ransomware would drop from US $ 20 billion (NZ $ 28.5 billion) this year to US $ 256 billion by 2031.

Hamilton also told MPs the world would likely see more ransomware attacks.

Cryptocurrency proponents believe they will have big benefits, but the current costs of using them are high.

Unsplash

Cryptocurrency proponents believe they will have big benefits, but the current costs of using them are high.

One reason was that regulatory oversight of crypto exchanges was “very uneven around the world,” he said.

“While cryptocurrency can easily leave New Zealand, it often ends up in places that are difficult to follow and if an exchange… is prone to crime, it’s nearly impossible.

“We will see more of this kind of thing because this is the future of a lot of organized crime,” he said.

Cryptocurrencies have also drawn criticism because of the electricity involved in their “mining,” which often involves the use of large numbers of computer servers to perform mathematical calculations.

The British University of Cambridge estimated in February that bitcoin consumed 113 terawatt hours of electricity last year, more than 2.5 times all the electricity used in New Zealand last year.

But Thorsten Albers, chief innovation officer at Auckland-based cryptocurrency firm Citibase, told the select committee that New Zealand should make tax-free “profits and profits” because they were tough. to impose.

“It would make a lot of headlines around the world,” he told MPs.

Such a move would bring many blockchain developers to the country, he said.

“New Zealand could be a crypto hub.”

The electricity consumed by bitcoin could power 2 and a half countries the size of New Zealand.

Sam Wilson / Stuff

The electricity consumed by bitcoin could power 2 and a half countries the size of New Zealand.

The Reserve Bank told the committee in September that cryptocurrencies are rarely used as a form of payment by businesses.

But BlockchainNZ, an association of organizations and individuals involved in the Blockchain technology that underlies cryptocurrencies, told the committee that they are a source of innovation.

He called on the committee and government agencies to work with the industry before imposing new regulations, “particularly with regard to tax law, securities law, anti-money laundering law. and terrorist financing and the law of financial service providers “.

Adam Dodds, who sits on the boards of a number of cryptocurrency companies, said the horse has been bolted on crypto and New Zealand is at risk of being left behind.

The benefits of crypto included the ability to pre-program rules into payments, so for example, if someone dies, their wealth could be automatically distributed according to their wishes, he said.

“I take into account that right now people are trying to figure out exactly how or why they might be spending bitcoin,” Dodds said.

“But you think of the ‘metaverse’, and where it’s going. Everything will be digitized value and you’re not going to pull out your Visa card in the middle of a metaverse and swipe it.

The metaverse is a broad term generally used to describe an environment in which people are able to navigate through a number of more immersive and interconnected augmented reality applications.

“What the police are really trying to say at the moment is that they are operationally and technically struggling to keep pace with change,” Dodds said.

It may not be “fair,” but organizations that want to protect themselves from threats like ransomware need to improve their security, he said.

“What has to happen is you have to focus in terms of investment to make this happen.”


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