Posted by Post Authored By: Natalie Elizaroff
The desire to invest in cryptocurrency continues to grow and expand in view of its unregulated and decentralized market. Just a few days ago an unidentified hacker pulled off one of the biggest cryptoheists to date, netting ~600 million in digital assets. [1] The person claiming to be the hacker has returned a little over 1/3 of the assets claiming that it was done “for fun” in order to expose vulnerabilities in the system before others could do so. [2] But this situation once again highlights how important it is to invest in security and regulation of the cryptocurrency market.
Not too long ago the nation experienced a massive crypto attack on Colonial Pipeline, the largest fuel pipeline in the United States. [3] The attack threatened gasoline and jet fuel distribution across the entire east coast. The hackers froze countless company files and forced over 5,500 miles of pipelines to be shut down, the first time in its 57-year history, in order curb the spread of malware over the Operational Technology network. [4] In just under a day, Colonial Pipeline caved and paid the $5 million extortion fee to restore the company’s assets, demonstrating just how crippling a cyberattack could be. Although the FBI revealed that they have been able to recover more than half of the $5 million that was paid out, this was only after the FBI poured numerous resources into the Colonial case because it was such a high-profile attack. Ultimately, the hackers were able to succeed in crippling a major U.S. industry and extorting millions of dollars in under a day – and they did it remotely.
Opportunities with remote capabilities are on the rise and cryptocurrency and cryptomining appeals to many people because it can be managed without a central bank. [5] Not only do investors of cryptocurrency not have to worry about inflation of printed money, but they are also able to capitalize on the digital transactions that are sweeping the post-pandemic nation. Online shopping, touch free payments, and other virtual experiences are rising in popularity after a nation that has been fear-driven to remain inside their homes. Accordingly, many innocent netizens are dipping their toes in crypto, reveling in the gamble of high stakes and high rewards. As many as 63% of Americans have identified as “crypto curious” and a good percentage of those have indicated that they plan to buy digital assets over the near year. [6]
Individuals that have taken some time to research into the market have found ways to tiptoe around and secure some profits from their investments. In other cases, people have not been so lucky and have downloaded applications or invested money without careful review. Google recently removed eight applications from its Play Store, including: BitFunds – Crypto Cloud Mining, Bitcoin Miner – Cloud Mining, Bitcoin (BTC) – Pool Mining Cloud Wallet, Crypto Holic – Bitcoin Cloud Mining, Daily Bitcoin Rewards – Cloud Based Mining System, Bitcoin 2021, MineBit Pro – Crypto Cloud Mining & btc miner, and Ethereum (ETH) – Pool Mining Cloud. [7] These applications were posing as cryptomining applications with promises of big profits to users, but were actually funneling all user purchases to outside crypto wallets. The Google-banned applications are merely the tip of the iceberg as these 8 apps do not include over 120 others that exist in similar capacity and have affected thousands of users since 2020. Likewise, the fraudulent applications do not include the cryptojacking efforts that hackers have created which includes cyberjacking kits that can be found on the dark web, malware, and advertisements that sneak into unsuspecting netizen’s computers and mine crypto in the background, without anyone noticing. [8]
Cryptocurrency is still an evolving concept and due to its online nature, is prone to vulnerability from hackers and other tech experts. Not all hope is lost in the Wild West of cryptocurrency, as just recently a $1 trillion infrastructure bill was passed in the senate which includes provisions for crypto regulation. Many U.S. lawmakers are interested in stopping cryptocurrency crime and promote stablecoin regulation. This may come as a big blow to crypto enthusiasts that thrive on the decentralized nature of cryptocurrency, but in view of the chaos and staggering potential for disruption of the everyday economy due to extortion efforts by hackers – it may be a necessary change.
[1] Ryan Browne and Arjun Kharpal, Hackers return nearly half of the $600 million they stole in one of the biggest crypto heists, CNBC (Aug. 11, 2021), https://www.cnbc.com/2021/08/11/cryptocurrency-theft-hackers-steal-600-million-in-poly-network-hack.html.
[2] Id.
[3] William Turton and Kartikay Mehrotra, Hackers Breached Colonial Pipeline Using Compromised Password, Bloomberg Cybersecurity (June 4, 2021), https://www.bloomberg.com/news/articles/2021-06-04/hackers-breached-colonial-pipeline-using-compromised-password.
[4] Christina Wilkie, Colonial Pipeline paid $5 million ransom one day after cyberattack, CEO tells Senate, CNBC (June 8, 2021), https://www.cnbc.com/2021/06/08/colonial-pipeline-ceo-testifies-on-first-hours-of-ransomware-attack.html.
[5] James Royal, What is cryptocurrency?, Bankrate (July 1, 2021), https://www.bankrate.com/investing/what-is-cryptocurrency/.
[6] Liam Frost, Nearly Two-Thirds of US Adults are ‘Crypto Curious’: Survey, Decrypt (Apr. 21, 2021), https://decrypt.co/68578/nearly-two-thirds-of-us-adults-are-crypto-curious-survey.
[7] Aparna Banerjea, Google bans 8 dangerous Android apps: Check if you have any of them, Mint (Aug. 24, 2021), https://www.livemint.com/technology/tech-news/google-bans-8-dangerous-android-apps-check-if-you-have-any-of-them-11629817287317.html.
[8] Michael Nadeau, Cryptojacking explained: How to prevent, detect, and recover from it, CSO Online (May 6, 2021), https://www.csoonline.com/article/3253572/what-is-cryptojacking-how-to-prevent-detect-and-recover-from-it.html.
About the author:
Natalie Elizaroff is a 3L at UIC School of Law, recently renamed from the John Marshall Law School. She is the Candidacy Editor of the Review of Intellectual Property Law, President of the Intellectual Property Law Society, and Treasurer of the Video Game Law Society. Prior to law school, Natalie graduated with a B.S. in Molecular Biology from Loyola University Chicago. Natalie currently works as a Law Clerk with Advitam IP, handling trademark litigation, patents, and other IP-related matters.