Roll up roll up, it’s that time for the monthly what we’re reading blog, in which some of us in the Photon research team review articles or papers which have piqued our interest in the last month. In this blog we’re looking at Chainanalysis’ recent report surrounding cryptocurrency and its relation to cybercrime, we’re learning about hacktivist activity in the ongoing Russia-Ukraine war, and we’re keeping our wallets safe in the Metaverse. 

Chris: Chainalysis 2022 Crypto Crime report

Ok  I’ll admit  I’m a bit of a crypto nerd. Anything that connects my hobby with my working life is always going to be of interest to me, and the recent report from Chainanalysis on cryptocurrency and cybercrime is a great read for both crypto enthusiasts and threat intelligence analysts alike. One of the key points in the report highlights that while illicit transactions in 2021 reached an all-time high, they also represented an all-time low in the share of overall cryptocurrency activity; this likely alludes to the enormous uptake in the usage of crypto overall in the past year. If you’ve watched the recent Super Bowl game you’ll have noticed the halftime CoinBase advert, which got a staggering 20 million people logging onto Coinbase’ website at the same time. This move actually crashed the site for a short period, but in the grand scheme of things, the ad can only be considered a huge success and was emblematic of how the crypto industry is becoming more mainstream. 

Chainalysis identified the two biggest areas of growth amongst crypto crime in 2021, as stolen funds and scams. For both of these crimes, Decentralised Finance (DeFI) was identified as a primary driver; DeFi refers to a class of decentralized cryptocurrency platforms that can run autonomously without the support of a central company, group, or person. The majority of the currency lost through scams was reportedly related to a technique known as a ‘rug-pull’; this refers to a process where a developer appears to set up a legitimate project, takes payment from investors, and then disappears with the investor’s money. With the current cryptocurrency market still largely a wild west of unregulated and speculative projects, many novice investors can easily be tricked into investing in risky projects or outright scams. DeFi was also attributed as a big reason for the increase in stolen cryptocurrency funds, which resulted largely from errors in the code of smart contracts governing DeFi protocols. 

Chainalysis also identified that while DeFi took on a larger role within money laundering, most laundered cryptocurrency is done through a small group of purpose built services. Digital Shadows (now ReliaQuest) has previously identified this sentiment, with law enforcement operations against this small group of money launderers likely to yield the greatest result in tackling ransomware and other cybercriminal activity as a whole. This concentration of money laundering services was however reportedly less than in 2020. Law enforcement operations against over the counter (OTC) money laundering services may have forced cybercriminals to disperse their activity to other operators. Another blog we recently published looked at the various methods used by ransomware groups to launder payments, which includes crypto-mixing services, chain hopping, and privacy coins. 

Cybercriminal ‘whales’—detailing accounts containing more than $1 million taken from criminal endeavors—also were reported as having access to extraordinarily large amounts of funds. In 2021, a total of 4,068 whale accounts had amassed a total of $25 billion, mind blowing figures. The overwhelming majority of the money held by these accounts were solicited through underground marketplace activity, encompassing 37.7% of all funds, and crypto scams, at 32.4%. Ransomware activity reportedly made a mere 1.9% of total funds held by whale accounts, which did take me by surprise given the enormity of the ransomware problem. Potentially, this illuminates the success ransomware groups have had in dispersing ransom payments across several accounts. 

The report contains so many more useful insights, which are likely to be explored by the Photon team in greater depth in the future. If you are interested in the crypto industry and its role in facilitating cybercrime, it’s definitely worth checking it out. 

Read about it here

Daniel: Hacktivists Joining Russia-Ukraine War

I’m sure most people are following the latest on the Russia-Ukraine War as closely as we are at Digital Shadows (now ReliaQuest). The media is rife with reports on the ongoing situation on the ground, but the war is also raging in the digital world. As the Ukrainian Defense Ministry asked for volunteers for cyber defense, several hacktivists have picked sides. CSO Online published an article debating whether hacktivism is actually helping the war effort or potentially hindering military operations. 

The article provided several reasons for not becoming a hacktivist and brought up valid points. It first and foremost called into question the legality of such attacks. Many organizations use cloud technology and share resources. A targeted distributed denial of service (DDoS) attack may impact other organizations, especially if the intended target is hosted on a shared server. The point that really struck a chord with me though, is that hacktivists may unknowingly hinder planned intelligence operations. If an intelligence agency infiltrates an organization with the intention of staying under the radar to gather information, a hacktivist attacking the same organization may set off alarms and cause the intelligence agency to lose its access to the target. 

CSO Online also looked at the positive outcomes that can result from hacktivism. In the ongoing conflict, Ukraine has explicitly requested help, calling on the hacker community to take up arms, digitally. With any call for help during an armed conflict, some will rise to the occasion, or otherwise suggest that this represents a level playing field due to the considerable cyber attacks targeting Ukraine that have been attributed to Russia. 

The ongoing war between Russia and Ukraine has seen a significant amount of hacktivist activity and this will almost certainly continue as the conflict continues. The impact of these hacktivists operations is yet to be determined, however this article represents a good read to understand the possible impact and consequences of such actions. 

Read about it here

Josh: Avoiding mischief in the MetaVerse

Given the influence of social media on our daily lives, it’s probably difficult to avoid the enthusiasm surrounding the MetaVerse. If you’re not sure exactly what the MetaVerse is, don’t be alarmed, I think most people have a differing opinion of what it represents. You could view the MetaVerse as the future of the internet, moving our 2D experience of mouse and keyboard into another dimension through virtual and augmented reality. Others have suggested the MetaVerse represents a video game—or, a really uncomfortable version of a Zoom call. If you’ve seen the movie Ready Player One—or better yet, read the excellent book—then you’re on the right track. 

Of course, where there is enthusiasm and innovation, there are bottom-feeders, a.k.a. cybercriminals. The metaverse is no exception. A blog in the Guardio Security highlights many of the risks to operating in this virtual world, including what the world looks like now and current MetaVerse related scams. Many of the scams have become more prevalent as the technology surrounding the cryptocurrency—and by extension, the MetaVerse—has permitted everyday users to enter this space. Extensions like MetaMask permit the transfer of currency and non-fungible tokens (NFTs) in a decentralized but user-friendly way. The introduction of new users into the world of crypto has however coincided with several social engineering attacks, many of which we’ve seen for many years; phishing attacks aimed at stealing passwords and secret recovery phrases. Yep, you name it, they’ve done it. 

This piece is very colorful and informative, showing new users how not to get fleeced in crypto-land. Keep those wallets secure and learn to walk before attempting to fly. And if you do, don’t fly too close to the sun. 

Read about it here.