Bitcoin’s star is rising. Cybercriminals are looking to cash in.

Even with the crypto market's recent pullback, bitcoin's value has more than tripled in a year. And the wave of novices entering the field are attractive targets.

Handcuffs next to bitcoins

Crypto crime is rising along with the surge in the value of digital currencies.

Photo: Bermix Studio/Unsplash

Bitcoin and other cryptocurrencies reached new heights of popularity this year, propelled by Elon Musk's tweets, Coinbase's blockbuster IPO and bitcoin's growing acceptance as an investment and store of value.

But a new report points to a downside: Criminals are trying to cash in on the growing interest in bitcoin and crypto. In fact, as the price of bitcoin has risen, so has the number of cyber attacks, a report published Tuesday by Barracuda Networks said.

"The danger is absolutely out there," Fleming Shi, Barracuda's chief technology officer, told Protocol. "That correlation between attacks and cryptocurrency value is stunning."

The Barracuda report focused mainly on bitcoin, whose value soared by more than 500% between October 2020 and April 2021. In that same period, the number of crypto-related attacks, including phishing impersonations and business email compromise incidents, jumped 192%, the security software company said.

The report used natural language processing technology to track online threats related to bitcoin and other cryptocurrencies. Threats related to non-bitcoin currencies was "a small portion of overall attacks," most of which cited bitcoin, the company said.

Bitcoin's price has fluctuated since mid-April, when it peaked near $65,000 around the time Coinbase shares began trading. In October, it traded around $10,600. Bitcoin's price was around $34,000 on Monday, according to CoinMarketCap.

That rally coincided with bitcoin's rising profile, pushed higher by news like Tesla's decision to take bitcoin as payment for cars, since reversed over concerns about bitcoin's environmental impact.

All that attention triggered more trading volume, which criminals quickly saw as an opportunity to strike, Shi said: "That drives the criminals to think, 'OK, now I can actually do a mass phishing campaign. I can get people to click on things more easily.' …As it becomes more popular, as it becomes more mainstream, they're leveraging that."

In general, bitcoin and other cryptocurrencies are considered "a perfect currency for criminal activity" since they are "unregulated, difficult to trace and increasing in value," the report said. Cybercriminals have sent emails to employees of specific organizations to entice them "to purchase bitcoin, donate to fake charities or pay a fake vendor," the report said.

Cryptocurrency advocates dispute the idea that bitcoin and other digital currencies are uniquely suited for crime, arguing that cash is harder to trace and used for more illicit transactions.

To the chagrin of crypto enthusiasts, though, bitcoin has emerged as the payment of choice in ransomware attacks. This was underscored in June when the FBI and the Justice Department announced they had recovered $2.3 million in bitcoin ransom paid to DarkSide, the criminal group that hacked Colonial Pipeline.

The Barracuda study offered insights into ransomware, which Shi said is definitely on the rise. The typical ransom demand has also been rising sharply, from "a few thousand dollars to $2 million" in 2019, to up to more than $20 million in 2021, the report said. "A majority of them are over $10 million ransom asks," Shi said.

He speculated that the spike in ransomware attacks was based on the belief of criminals that bitcoin and crypto offer them total anonymity. "When blockchain and cryptocurrency came out, it felt very secure for the bad guys," he said.

But as the Colonial Pipeline case demonstrated, he said, "While cryptocurrencies are hard to trace, they're not untraceable. With enough effort, you will get there."

And the trend toward higher ransom demands suggests "fewer organizations are actually paying the ransom and choosing to take the hit," the report said. This has led criminals to make bigger ransom demands, which has also prompted more ransomware targets to turn to law enforcement for help, Shi said.

Sponsored Content

Great products are built on strong patents

Experts say robust intellectual property protection is essential to ensure the long-term R&D required to innovate and maintain America's technology leadership.

Every great tech product that you rely on each day, from the smartphone in your pocket to your music streaming service and navigational system in the car, shares one important thing: part of its innovative design is protected by intellectual property (IP) laws.

From 5G to artificial intelligence, IP protection offers a powerful incentive for researchers to create ground-breaking products, and governmental leaders say its protection is an essential part of maintaining US technology leadership. To quote Secretary of Commerce Gina Raimondo: "intellectual property protection is vital for American innovation and entrepreneurship.”

Keep Reading Show less
James Daly
James Daly has a deep knowledge of creating brand voice identity, including understanding various audiences and targeting messaging accordingly. He enjoys commissioning, editing, writing, and business development, particularly in launching new ventures and building passionate audiences. Daly has led teams large and small to multiple awards and quantifiable success through a strategy built on teamwork, passion, fact-checking, intelligence, analytics, and audience growth while meeting budget goals and production deadlines in fast-paced environments. Daly is the Editorial Director of 2030 Media and a contributor at Wired.

LA is a growing tech hub. But not everyone may fit.

LA has a housing crisis similar to Silicon Valley’s. And single-family-zoning laws are mostly to blame.

As the number of tech companies in the region grows, so does the number of tech workers, whose high salaries put them at an advantage in both LA's renting and buying markets.

Photo: Nat Rubio-Licht/Protocol

LA’s tech scene is on the rise. The number of unicorn companies in Los Angeles is growing, and the city has become the third-largest startup ecosystem nationally behind the Bay Area and New York with more than 4,000 VC-backed startups in industries ranging from aerospace to creators. As the number of tech companies in the region grows, so does the number of tech workers. The city is quickly becoming more and more like Silicon Valley — a new startup and a dozen tech workers on every corner and companies like Google, Netflix, and Twitter setting up offices there.

But with growth comes growing pains. Los Angeles, especially the burgeoning Silicon Beach area — which includes Santa Monica, Venice, and Marina del Rey — shares something in common with its namesake Silicon Valley: a severe lack of housing.

Keep Reading Show less
Nat Rubio-Licht

Nat Rubio-Licht is a Los Angeles-based news writer at Protocol. They graduated from Syracuse University with a degree in newspaper and online journalism in May 2020. Prior to joining the team, they worked at the Los Angeles Business Journal as a technology and aerospace reporter.


SFPD can now surveil a private camera network funded by Ripple chair

The San Francisco Board of Supervisors approved a policy that the ACLU and EFF argue will further criminalize marginalized groups.

SFPD will be able to temporarily tap into private surveillance networks in certain circumstances.

Photo: Justin Sullivan/Getty Images

Ripple chairman and co-founder Chris Larsen has been funding a network of security cameras throughout San Francisco for a decade. Now, the city has given its police department the green light to monitor the feeds from those cameras — and any other private surveillance devices in the city — in real time, whether or not a crime has been committed.

This week, San Francisco’s Board of Supervisors approved a controversial plan to allow SFPD to temporarily tap into private surveillance networks during life-threatening emergencies, large events, and in the course of criminal investigations, including investigations of misdemeanors. The decision came despite fervent opposition from groups, including the ACLU of Northern California and the Electronic Frontier Foundation, which say the police department’s new authority will be misused against protesters and marginalized groups in a city that has been a bastion for both.

Keep Reading Show less
Issie Lapowsky

Issie Lapowsky ( @issielapowsky) is Protocol's chief correspondent, covering the intersection of technology, politics, and national affairs. She also oversees Protocol's fellowship program. Previously, she was a senior writer at Wired, where she covered the 2016 election and the Facebook beat in its aftermath. Prior to that, Issie worked as a staff writer for Inc. magazine, writing about small business and entrepreneurship. She has also worked as an on-air contributor for CBS News and taught a graduate-level course at New York University's Center for Publishing on how tech giants have affected publishing.


These two AWS vets think they can finally solve enterprise blockchain

Vendia, founded by Tim Wagner and Shruthi Rao, wants to help companies build real-time, decentralized data applications. Its product allows enterprises to more easily share code and data across clouds, regions, companies, accounts, and technology stacks.

“We have this thesis here: Cloud was always the missing ingredient in blockchain, and Vendia added it in,” Wagner (right) told Protocol of his and Shruthi Rao's company.

Photo: Vendia

The promise of an enterprise blockchain was not lost on CIOs — the idea that a database or an API could keep corporate data consistent with their business partners, be it their upstream supply chains, downstream logistics, or financial partners.

But while it was one of the most anticipated and hyped technologies in recent memory, blockchain also has been one of the most failed technologies in terms of enterprise pilots and implementations, according to Vendia CEO Tim Wagner.

Keep Reading Show less
Donna Goodison

Donna Goodison (@dgoodison) is Protocol's senior reporter focusing on enterprise infrastructure technology, from the 'Big 3' cloud computing providers to data centers. She previously covered the public cloud at CRN after 15 years as a business reporter for the Boston Herald. Based in Massachusetts, she also has worked as a Boston Globe freelancer, business reporter at the Boston Business Journal and real estate reporter at Banker & Tradesman after toiling at weekly newspapers.

Latest Stories