The UK’s high court has issued an order demanding Bitcoin exchange Bitfinex to freeze $860,000 in Bitcoin payments sent to ransomware hackers through the platform.
A huge portion of the money came from a ransom paid by a Canadian insurance company that had to part with $1.2 million after it was hacked. The company was hit by a computer virus called Bitpaymer which locks computer systems. The hackers then demanded payments in Bitcoin to offer a decryption tool that would reinstate system access.
Investigators looking into the matter were able to track the payment but found some of it had already been laundered. However, they also found that about $860,000 had made its way to Bitfinex, probably to be sold.
The UK’s high court issued orders to freeze the payments and demanded additional information about the users associated with the loot. Bitfinex is registered in the Virgin Islands. It is not clear if the exchange has complied with the order or not. However, the company said that it worked with authorities to track the Bitcoin.
Bitfinex also said that it was not at the center of the investigation. The exchange maintained that it is an innocent party that just got mixed up in something it was unaware of. The company also vowed to cooperate with authorities in order to see that the matter is resolved as quickly as possible.
The insurance company that made the payments didn’t comment on the matter. Since this is an ongoing investigation and it is already a court case in progress, all the parties involved have chosen to keep things quiet for the moment.
More hacks are imminent
Bitcoin is the go-to currency for Ransomware hackers and other illicit activities online partly because it’s harder to track compared to traditional fiat currencies. Just recently, a report by Hard Fork found that over $1.4 billion in Bitcoin tied to illicit or illegal activities was transacted in 2019 alone.
These transactions were linked to two exchanges – Binance and Huobi. Despite this, it’s not common for government institutions or any other third party players to order independent exchanges to freeze Bitcoin assets.
The decision by the UK’s high court may not be unprecedented but it’s very rare. Nonetheless, even the US government has at some point interfered with Bitcoin exchanges and their operations for national security reasons.
For example, in 2018, the US Department of Justice noted that it would be considered illegal for people to interact with Bitcoin addresses that were linked to a duo of cybercriminals from Iran.
There are people who feel that exchanges have a huge role to play in preventing the use of Bitcoin and other digital currencies for criminal activity. Bitfinex seems to be cooperating with authorities to track the $1.2 million paid by the Canadian company in ransomware.
But billions of dollars of illicit Bitcoin go through various exchanges and no action has been taken. Things may start to change in the near future though.