Crypto Unable to Shake Reputation as Ransomware Tool in Senate Hearing

The crypto industry again faced damning comments Tuesday about its reputation as an enabler of ransomware, with a Senate hearing examining how hackers continue to request payment in digital assets for their criminal attacks.

"These malign actors almost exclusively demand cryptocurrencies when extorting large sums of money, because they can take steps to obscure their transactions and circumvent regulatory scrutiny, making payments more difficult to trace," said Senator Gary Peters (D-Mich.), chairman of the Senate Homeland Security Committee.

Cryptocurrency advocates have long battled this perception, and the situation hasn't improved, according to witnesses testifying Tuesday.

"Ransomware actors know they want to cash out their proceeds using the most efficient means," said Bill Siegel, the CEO of Coveware, a firm that negotiates with hackers on behalf of their victims. "Cryptocurrency is the most efficient means. It has great scale. They can move it very quickly across borders. It can be moved without worry of being reclaimed, unless they make an operational security mistake."

Bitcoin remains dominant, he said, though some bad actors prefer the coins designed to better maintain privacy, such as Monero.

Jackie Burns Koven, the head of cyber threat intelligence at Chainalysis Inc., argued that crypto shouldn't be painted with a broad brush as a shield for anonymity. She described how uniquely transparent the transactions can be, sometimes making it "much easier" to track than other types of payment.

She said there were more than $712 million in ransom payments made in 2021. While that’s a record-breaker of a year even as it likely understates the full amount thanks to a lack of reporting, in terms of overall market size it’s pretty negligible – Chainalysis estimates just 0.14% of overall crypto transaction activity was connected to criminality in 2021.

As the testimony took place, the U.S. Department of Justice said in a report released on Tuesday, that the U.S. should share more information about crimes tied to cryptocurrency and help build up its overseas partnerships to help combat them. The report was one of the first responses to President Joe Biden’s executive order mobilizing the federal government to come up with responsible oversight of digital assets.

"I plan to continue my investigation to further examine the role cryptocurrencies play in these cybercrimes and other criminal activities," said Senator Peters, concluding the hearing.