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PwC: Bitcoin Ransomware Hackers Laundered Money via WEX Exchange

Iranian Bitcoin hackers used the WEX exchange to launder Bitcoin acquired through ransomware, according to a PwC report.

Big Four consulting and auditing company PwC has linked Iranian nationals behind Bitcoin (BTC) ransomware scheme SamSam to the crypto exchange WEX in a recent report published in February.   

The report is based on information that was previously disclosed by the United States Department of Justice (DoJ). As per the DOJ, two Iranians — Faramarz Shahi Savandi and Mohammad Mehdi Shah Mansouri — were responsible for creating SamSam. SamSam is a ransomware demanding Bitcoin that reportedly damaged multiple U.S. companies, government agencies, universities, and hospitals. Within 34 months the hackers managed to extort over $6 million in Bitcoin and cause over $30 million in losses.

The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) also sanctioned two more Iranians, Mohammad Ghorbaniyan and Ali Khorashadizadeh. They were allegedly operating Iran-based crypto exchanges that helped Savandi and Mansouri to exchange the BTC extorted via SamSam.

After analyzing wallet addresses and emails provided by the U.S. government, PwC came to the conclusion that Khorashadizadeh and Ghorbaniyan could be linked to crypto exchange WEX.

WEX was known as BTC-e prior to a rebranding move in September 2017. The exchange rebranded in order to distance itself from a money laundering investigation that shuttered BTC-e in July of that same year. PwC further states that BTC-e was involved in exchanging at least $1.9 million related to SamSam:

“BTC-e is known for its involvement in laundering approximately $4 billion and is responsible for cashing out 95 percent of all ransomware payments made from 2014 to 2017 — of which $1.9 million came from SamSam ransomware.”

Moreover, PwC cites another investigation that links Bitcoin transactions on BTC-e to Russia’s Main Intelligence Directorate of the General Staff (GRU). The cyber espionage group “Fancy Bear” has purportedly been linked to a cyber attack on the Democratic National Committee ahead of the 2016 United States presidential elections.

As Cointelegraph previously reported, Alexander Vinnik, the alleged former operator of defunct BTC-e, was arrested by Greek police back in July 2017 as the DOJ accused him of fraud and money laundering. Russian human rights officials have sought Vinnik’s extradition back to his home country following health complications that are the result of a months-long hunger strike.

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Iran Declares Telegram Crypto Aspirations an Act Against National Security

Iranian officials have declared any cooperation with Telegram to develop a cryptocurrency to be an act against national security.

The Iranian government has taken further steps against Telegram’s cryptocurrency development, the Tehran Times reports Dec. 31.

Secretary of the Criminal Content Definition Task Force Javad Javidnia has declared that any cooperation with the encrypted messaging app to launch its Gram token will be considered an act against national security and a disruption to the national economy. Javidnia stated:

“One of the most important factors in banning Telegram was a sense of serious economic threat from its activities, which was unfortunately marginalized and neglected due to the fuss in the political atmosphere of the country.”

Iran first banned the app in April when supreme leader Ayatollah Ali Khamenei said that government agencies would no longer use the app. The country’s judiciary subsequently forbade its use altogether. In December 2017, Iran temporarily blocked Telegram and photo-sharing app Instagram in order to “maintain peace” amid widespread protests.

Prior to the ban, Iranian officials criticized the app, stating that its initial coin offering (ICO) was potentially “undermin[ing] the national currency of Iran.” Hassan Firouzabadi, the secretary of the High Council of Cyberspace approved the suggested ban due to Telegram’s potential for bringing cryptocurrency to all of its Iranian users.

Firouzabadi referred to Telegram as an “enemy of the private sector,” since “Telegram never [agreed] to have an office in Iran and refused to work with the private sector.”

The go-to messaging app of the crypto industry was also banned in Russia due to concerns over its ICO, with the possibility of a “completely uncontrolled financial system” reportedly leading to the block.

Telegram raised nearly $1.7 billion in two funding rounds earlier this year, one of the industry’s largest. The ICO sought investment to support the development of the Telegram messenger app and its own blockchain platform Telegraph Open Network.

Russian billionaire Roman Abramovich reportedly took part in the first round of the ICO. Persons familiar with the matter told Russian media that Abramovich invested $300 million. Jon Mann, Abramovich’s spokesperson, made no comment as to whether Abramovich took part, but denied the $300 million claim.

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Ex-CIA Official Claims Blockchain Is ‘Biggest Threat’ to Future of US National Security

A former CIA intelligence officer has claimed blockchain represents a greater “threat to America’s national security” than North Korea, Iran or Russia.

Andrew Bustamante, reportedly a former CIA intelligence officer, has claimed blockchain is “super powerful stuff” that represents a threat to America’s national security. Bustamante, who specializes in publishing life-hacks based on his knowledge of espionage, made his elliptical remarks in a subreddit thread on Dec. 22.

Bustamante is also reportedly a United States Air Force veteran and Fortune 10 corporate advisor. He brought up blockchain in response to a question in a subreddit thread, on news aggregation site Reddit, dedicated to Bustamante’s “Everyday Espionage” — what he dubs an “integrated education and training platform that teaches international espionage tactics to benefit everyday life.”

One Redditor had asked Bustamante what he thought represents “the biggest threat to America [sic] national security in the coming years?” giving several leading possible answers such as “Russia,” “climate change,” “Iran” or “North Korea?” To which Bustamante replied:

“Block-chain technology [sic.] No joke. Super powerful stuff, and the first one to figure out how to hack it, manipulate it or bring it down wins.”

While the ex-CIA official did not further elaborate on his remarks, he acknowledged one other Redditor’s response, who asked him for clarification in regard to blockchain versus developments in quantum computing — to which Bustamante responded with “fair point!!!”

Bustamante’s exclamation spawned a discussion of the possibility that quantum computing will “forever alter” the cryptographic protection that underpins blockchain — thus specifically attributing Bustamante’s “bring it down” to an argument along this vein.

Others meanwhile attempted to extrapolate different meanings based on the scant information given in Bustamante’s comment.

One Redditor suggested his remarks could refer to “the persistent possibility of untraceable, anonymous transactions [that] can happen” on blockchains as being one type of national security threat allegedly posed by the technology. Another pointed to the potential for “falsified” data — i.e. hijacking the blockchain for the purposes of disinformation — which would allegedly become all the more pernicious when stored in an immutable blockchain-based system.

Notably, the last time blockchain, alleged geopolitical machinations and the intelligence community made joint headlines was when the U.S. Department of Justice (DoJ) charged seven officers from Russia’s Main Intelligence Directorate (GRU) with crypto-funded global hacking and related disinformation operations this October.

In July, the DoJ had also charged twelve individuals from two units of the GRU with using crypto — allegedly either mined or obtained by “other means” — to fuel efforts to hack into computer networks associated with the Democratic Party, Hillary Clinton’s presidential campaign and U.S. elections-related state boards and technology firms.

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Iran: Science and Tech Department Official Says Blockchain Can Improve National Economy

An official at the Iranian government’s vice presidency for science and technology has said blockchain can help improve the country’s national economy.

An official at the Iranian government’s vice presidency for science and technology has said blockchain can help improve the country’s national economy. His statements were reported by English-language daily newspaper The Tehran Times on Dec. 16.

Alireza Daliri, deputy for management development and resources at the vice presidency for science and technology, is quoted as saying that blockchain is one of the new technologies on which Iran should coordinate with international partners, noting that “over 140 countries” are today benefiting from the invention.

Daliri is reported to have acknowledged some countries’ concerns over the technology’s possible risks, but stated his belief that blockchain’s positive potential outweighs its drawbacks.

He reportedly outlined the principles of blockchain infrastructure, emphasizing its immutability and strong cryptography, adding that the vice presidency has decided to implement the technology across multiple — if unspecified — fields. Daliri noted that blockchain can streamline cumbersome bureaucratic procedures, and that the department would put its best efforts into enabling and supporting private sector blockchain initiatives.  

According to The Tehran Times, a group of “blockchain experts” from Tehran’s Sharif University of Technology have this month announced they are working to introduce the first Iranian blockchain-based taxi app, with the startup’s founder reporting the team has launched its own initial coin offering (ICO).

Even as the government remains receptive to blockchain, the Central Bank of Iran (CBI) banned domestic financial institutions from handling decentralized cryptocurrencies this April.

During the spring, reports surfaced suggesting that Iranians were increasingly turning to Bitcoin (BTC) and other cryptocurrencies in the midst of domestic economic turmoil ahead of the anticipated U.S. exit from the 2015 Iran nuclear deal (JCOA).

Iran’s National Cyberspace Center has meanwhile revealed that the draft of a state-backed digital currency project is ready, which was avowed to be a centrally-controlled means of circumventing international sanctions when the plan was officially confirmed this July.

This October, the United States Financial Crimes Enforcement Network (FinCEN) called on cryptocurrency exchanges to monitor Iranian use of crypto to evade sanctions.

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Harvard Economist: Bitcoin’s Future Value More Likely to Be $100 Than $100K

Ex-chief economist of the IMF and Harvard University Professor of Economics and Public Policy Kenneth Rogoff has characterized Bitcoin as “a lottery ticket.”

The former chief economist of the International Monetary Fund (IMF) has characterized Bitcoin (BTC) as “a lottery ticket,” in an article for major United Kingdom daily broadsheet The Guardian Dec. 10.

Writing in the midst of the recent crypto market price collapse, current Harvard University Professor of Economics and Public Policy Kenneth Rogoff suggested that the “overwhelming sentiment” among crypto advocates is that the total “market capitalisation of cryptocurrencies could explode over the next five years, rising to $5-10 [trillion].”

The historic volatility of the emerging asset class, he conceded, indeed indicates that Bitcoin’s decline from its all-time highs of $20,000 to under $3,500 earlier today is “no reason to panic.”

Nonetheless, the economist dismissed the “crypto evangelist” view of Bitcoin as digital gold, calling it “nutty,” stating its long-term value is “more likely to be $100 than $100,000.” Rogoff argued that unlike physical gold, Bitcoin’s use is limited to transactions – making it purportedly more vulnerable to a bubble-like collapse. Additionally, the cryptocurrency’s energy-intensive verification process is “vastly less efficient” than systems that rely on “a trusted central authority like a central bank.”

Even if Bitcoin should not necessarily be “worth zero,” Rogoff argued that national governments and “regulators are gradually waking up to the fact that they cannot countenance large expensive-to-trace transaction technologies that facilitate tax evasion and criminal activity.”

This, in his view, places Bitcoin in a double bind, with implications for its future value: “take away near-anonymity and no one will want to use it; keep it and advanced-economy governments will not tolerate it.”

While the economist noted that governments worldwide may in due time “regulate and appropriate” the innovations of the new asset class –– as shown by the interest of multiple central banks in digital currency issuance –– he argued that coorinatinated global regulation would eventually seek to “stamp out privately constructed systems,” with only certain geopolitical outliers as a possible exception:

“The right way to think about cryptocurrency coins is as lottery tickets that pay off in a dystopian future where they are used in rogue and failed states, or perhaps in countries where citizens have already lost all semblance of privacy. It is no coincidence that dysfunctional Venezuela is the first issuer of a state-backed cryptocurrency (the “petro”).”

Rogoff’s argument that “disgruntled” nation states –– Cuba, Iran, Libya, North Korea, Somalia, Syria, and Russia –– are turning to cryptocurrencies under the burden of sanctions has been raised by multiple analysts previously. A report earlier this fall indicated that the government of North Korea was “laundering” crypto into fiat to evade U.S. sanctions. Iran is going one step further, exploring the creation of its own national cryptocurrency, according to a report this summer.