Illicit Cryptographic Activity Detected by the US Treasury Department

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Cryptocurrency fraud, fraud management and cybercrime

US cyber official warns of potential Russian cyberattacks

Dan Gunderman (dangun127) •
March 21, 2022

Nellie Liang, Under Secretary for Home Finance at the US Department of Treasury (Photo: Brookings Institution via Flickr/cc)

The war in Ukraine has been raging for almost a month. Cyberoffensives have crept into the digital underground. Economic sanctions have hampered Moscow. Economists and foreign policy experts have long warned that Russia could use blockchain-enabled transactions to funnel money from oligarchs or try to revive its economy.

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The latter’s prospects are limited, officials said, but now the US Treasury Department is reportedly warning that it has detected an increase in the use of digital assets for illicit transactions since February 24 – when the invasion of Ukraine started.


Still, according to the Treasury official, the volume is too insignificant to help Moscow circumvent U.S. designations against Russian banks, its oligarchs and senior officials, and oil exports, among others.


The Treasury’s comments came Friday from Nellie Liang, Undersecretary for Home Finance, who told the Reuters news service that transferred crypto assets cannot power an economy, and that Russia lacks sufficient infrastructure and rails to effectively – and quickly – pivot to cryptocurrencies.


According to the same report, Liang said, “The size of the transaction we have seen is quite small. Of course, we recognize that we may not be seeing everything, but there is a fair amount of oversight. At this stadium, we just don’t see that it could be used on a large scale to evade sanctions.”


Liang also told Reuters: “While it is growing because the use of crypto is growing, nowhere is its share as a means of illicit finance as large as simply using crypto. ‘cash.”


Step forward


President Joe Biden’s recent executive order on cryptocurrencies attempts to align US policy with that of its allies – another effort to unify Western governments and improve their enforcement capabilities (see: President Joe Biden signs an executive order on cryptocurrency).


In fact, the new directive establishes national policy in six different areas, including illicit finance and US leadership in the global financial system.


The order directs the interagency to develop related policy recommendations, directs the Federal Reserve to continue its research on the U.S. digital dollar, and demands that the Treasury Department produce a report on the future of money and systems. payment, among other measures.


It follows previous enforcement actions – including foreign exchange sanctions – from the Treasury Department, recent stablecoin analysis by the President’s Financial Markets Task Force, record asset seizures conducted by the Ministry of Justice, etc.


Fear among lawmakers?


Despite community assurances that Russia’s G-20 economy cannot simply “go” to crypto, lawmakers continue to express concern about the potential abuse of blockchain technology.


At a related Senate Banking, Housing, and Urban Affairs Committee hearing last week, committee chair Sherrod Brown, D-Ohio, noted that “crypto can be used…to commit crimes. , facilitate illicit financing, terrorism and other forms of criminal activity”. , and threaten our national security” (see: Chairman of the banking committee: crypto can “endanger security”).


Brown said that “bad actors around the world – hackers, scam artists, drug dealers, terrorist groups and [authoritarian] regimes – sought digital assets to facilitate their crimes and intimidation. »


Senator Elizabeth Warren, D-Mass., a longtime critic of lax cybersecurity and price volatility associated with cryptos, however, argued Thursday that while Russia may not be able to evade all sanctions by moving his assets into crypto,” the assets are a viable option for Putin’s oligarchs trying to “hide a few billion dollars.”


During the hearing, she formally introduced related legislation – the Digital Asset Sanctions Compliance Improvement Act – which would discourage foreign crypto firms from doing business with sanctioned Russian elites.


The legislation would give the Biden administration the power to suspend transactions with crypto addresses tied to Russia. It would also require US taxpayers engaged in offshore transactions over $10,000 to file a FinCEN 114 form.



Image from ISMG file


Critical American Warning

Additionally, on Monday, the White House warned of potential Russian cyber escalation — including targeted attacks on U.S. organizations or infrastructure.




According to The hillAnne Neuberger, deputy national security adviser for cyber and emerging technologies, told reporters on Monday afternoon: “To be clear, there is no certainty that there will be a cyber incident on critical infrastructure. This is a call to action and a call to accountability for all of us.”




She said the administration detected “preparatory activity” and specific companies were notified privately.




In a fact sheet Released by the White House on Monday, the administration urges organizations to implement MFA, run tabletop exercises, improve detection capabilities, back up and encrypt data, and focus on other security measures. cyber-hygiene.



Anonymous hacker in an image courtesy of FotoArt-Treu via Pixabay

Anonymous: Cyberwar sequel


While many cybersecurity experts said they were surprised at the lack of direct Russian cyberoffensives – including on Ukrainian infrastructure or Western allies – the nearly month-long war was not devoid of strategic hacking.


The international hacking collective Anonymous almost immediately declared all-out cyber war against Russia when it launched the campaign in late February. Later, he allegedly violated major Russian news agencies and ministries. As recently as last week, the collective reportedly seized CCTV feeds in Russia and released them with anti-war messages (see: Russia says it has seen ‘unprecedented’ level of cyberattacks).


This week, the group allegedly exploited a printer flaw to send targeted messages. According to what is believed to be an Anonymous-controlled Twitter handle, the band wrote: “We are anonymous[.] We printed anti-propaganda and tor installation instructions to printers across #Russia for 2 hours, and printed over 100,000 copies so far. 15 people are working on this operation right now. #OpRussia #OpUkraine…”


In a new report from International business timewho spoke to an anonymous hacktivist, the publication says the operation involves printed PDFs with messages about the misdirection of Russian media.


The hacking group is said to be helping others install Tor, which allows anonymous communication, to glimpse global news reports.


The translated message from Anonymous, in part, reads: “The Russian people should find abhorrence in Putin’s actions.”



“On both sides [here] are launching attacks, one using state-trained cyber experts and the other using hacktivists like Anonymous to target their enemy’s infrastructure,” says James McQuiggan, Director of Education for Florida Cyber ​​Alliance.


McQuiggan, a security awareness advocate for the company KnowBe4, adds, “What’s to follow could be the continued barrage of DDoS attacks like rocket launches against facilities or social engineering to gain access to networks.”


A new report from The Washington Post on Monday says that despite being heavily censored by the Russian government, Russian citizens are increasingly opting to use VPN and Tor browser to access blocked sites.

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