Bitcoin has been hailed as an alternative to physical currency, partly due to its anonymous nature leading to increased security and privacy. This feature has also made it popular for criminal activity, such as money laundering and black-market transactions. The latest Bitcoin-related crime has also added to the rise of criminal blackmailing and extortion.
Earlier this week, five Russian banks were terrorized by distributed denial-of-service (DDoS) attacks, Coin Telegraph reports. The cyber criminals threatened more DDoS attacks if their demands of 50 Bitcoins ($11,000 USD) were not met.
Artyom Sychev, Deputy Director of the General Directorate of Security and Information Protection of Russia’s Central Bank, says the attack came despite early warning signs that several financial institutes in Russia would be targeted.
"Last Saturday monitoring channels received information that, obviously, several major financial institutions will be attacked. We contacted with banks and gave them the possible details of how the attack will take place.”
Mr Sychev adds the attacks did not cause major damage as it didn’t affect banking operations and services.
This is not the first time blackmailers have demanded Bitcoin for ransom. In August, criminals took advantage of Ashley Madison users, by threatening to expose users to their friends and family. The extortionists demanded 1.0000001 BTC in exchange for mercy.
The attacks will not improve the damaged reputation of cryptocurrencies in Russia, due to its links to online criminal activity. Russia’s Ministry of Finance has proposed to ban it altogether, suggesting a maximum of two years in prison for the emission of cryptocurrency. Under the proposed laws, those who are caught buying, selling and distributing cryptocurrency could be fined up to $4,500, or given up to 360 hours of correctional labor.