Bitcoin Regulations Create Issues for Cyber Security Experts
Coinbase, one of the major Bitcoin exchanges in the U.S., has been suspending accounts of cyber security consultants, according to CoinDesk. These consultants, also called “white hat” hackers, often use bitcoin accounts and transactions to make ransom payments on behalf of clients or as payment for other cyber security protection.
Coinbase, one of the major Bitcoin exchanges in the U.S., has been suspending accounts of cyber security consultants, according to CoinDesk. These consultants, also called “white hat” hackers, often use bitcoin accounts and transactions to make ransom payments on behalf of clients or as payment for other cyber security protection.
However, these transactions can appear suspicious under U.S. Department of Justice regulations meant to prevent criminal transactions such as money laundering. In December 2016, another cryptocurrency exchange, similar to CoinBase, faced charges for allowing these type of transactions and accounts although the transactions were legal and authorized by clients.
Vinny Troia, a cyber security expert with Night Lion Security, had his account questioned last year by Coinbase. After explaining to the company that part of his business involves using these accounts to pay digital ransom after a client’s data had been stolen or hacked, a very common practice, CoinBase asked for proof of authorization from the U.S. Department of Justice. Although Troia could find no evidence that such an authorization existed or was required, Coinbase suspended his account. When Troia opened accounts in other names so that he could continuing working, Coinbase suspended those accounts as well.
Overall, the conflicting responses both by the legal system and the exchanges themselves, illustrate the growing difficulties in the fairly new realm of Bitcoin currency. As mentioned before, it is common for cyber security firms to pay money to shady characters who have taken their clients computers hostage or stolen trade secrets. Police departments and hospitals have worked with similar companies to pay ransoms for stolen data or breached systems. Even the FBI has said paying the ransoms in this manner is sensible. Still, regulations do not differentiate well enough between the innocent transactions and the more malicious ones and as such cyber think tanks like Coin Center have come out strongly against them.
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Rachel Kowalski
Rachel Kowalski is the Cybersecurity Analyst at TrendinTech, where she covers vulnerabilities, ransomware, supply chain attacks, nation-state operations and the security rules shaping organizations in the United States and Europe. Before moving into journalism she worked as a threat intelligence analyst at a security vendor and later reported for CyberScoop and the security desk at Wired, covering the SolarWinds compromise and the ransomware wave that hit hospitals and pipelines. Rachel holds a Master of Science in Cybersecurity from the Georgia Institute of Technology and attends Black Hat and DEF CON in Las Vegas each year, where she follows research from the security community. She writes to make risks and countermeasures understandable to people who are not specialists.
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