Details on how Russian hackers used BTC to pay for activity, how it backfired

14 Jul, 2018
by Arthur Sillers
Details on how Russian hackers used BTC to pay for activity, how it backfired

The US investigation into allegations of Russian hacking and collusion affecting the 2016 presidential election have entered the cryptosphere, with the head investigator Robert Mueller alleging that Russian hackers paid for their computer infrastructure with Bitcoin. This has reignited concerns over the nefarious use of crypto which have long plagued it from the beginning. Those in the crypto community were quick to point out that Bitcoin helped get the alleged hackers caught.

According to an indictment released yesterday, 12 Russian hackers who broke into Hilary Clinton, DCCC, and the DNC's websites paid for their VPNs, servers, and computer infrastructure using Bitcoin in order "to avoid direct relationships with traditional financial institutions, allowing them to evade greater scrutiny of their identities and sources of funds."

Many, especially those who were already crypto skeptics took this news as evidence for the notion that Bitcoin is a good tool for criminals.

Those in the crypto community, however, were quick to point out that while the fact that Russian hackers used Bitcoin to conduct clandestine international subterfuge, the new indictment shows the fact that Bitcoin is not an effective tool for anonymous criminal activity.

The indictment specifically details how the hackers' use of Bitcoin served as a critical tool for the special counsel being able to track down the individuals. This means that the hackers' use of Bitcoin actually partly led to their identification. In this case, the investigators linked an email with a request for a specific amount of Bitcoin to transfer, and then found a transfer of that specific amount of Bitcoin in the blockchain, which linked the email address to the Bitcoin addresses of the sender and receiver. Thereafter, after looking at other transactions these Bitcoin addresses made, the investigators worked out what websites were being purchased by the hackers, unraveling the entire operation piece by piece.

 An associate product manager at Google points out in a Medium post  that while Bitcoin offers some semblance of anonymity, the public ledger underpinning Bitcoin means every transaction has a record, and a properly motivated or savvy investigator can work out which of these transactions went where, as was the case in the Mueller investigation.

On the one hand, the discussion around the role of Bitcoins in the Mueller probe might prove that Bitcoin isn't a tool which helps criminals and scammers, it is also a good reminder that anything done online is not truly anonymous. Not only were the hackers using a purportedly anonymous payment system they allegedly took further measures, "purchasing bitcoin through peer-to-peer exchanges, moving funds through other digital currencies, and using pre-paid cards. They also enlisted the assistance of one or more third-party exchangers who facilitated layered transactions through digital currency exchange platforms providing heightened anonymity," according to the indictment. Nonetheless, the publically available data on the blockchain was a key clue to the identity and operations of the Russian operatives

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