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One thing I am still confused about is how the blockchain is supposed to make such ransom payments easily traceable. That apparently must not be the case if org

One thing I am still confused about is how the blockchain is supposed to make such ransom payments easily traceable. That apparently must not be the case if organizations keep falling victim to these attacks.

rawtxapp 5y ago
> A Russian-speaking ransomware syndicate > The Babuk group said on its website late Monday I don't think they care about it being untraceable, they can dump it on a non-US exchange, they probably care about it being un-censorable. That said, the article doesn't mention if they want the payment in crypto (presumably they do).
- tolbish 5y ago
  The linked article said Bitcoin.
TheSpiceIsLife 5y ago
I'm no expert, but isn't a public blockchain only pseudonymous? Bitcoin, for example, doesn't claim to be an anonymous payment system.
- chrisco255 5y ago
  There are blockchains like Zcash and Monero that are anonymous.
- Stranger43 5y ago
  Yes but there is no existing way to poison illegitimately gained bitcoins as not eligible for use with legitimate purchases even though it's totally possible to trace each and every bitcoin used to pay a ransom. In addition there is no 3rd party verification of the wallet owners so in practice there is plenty of ways to whitewash dirty bitcoin into clean currency, especially in economies with an large black/gray sector. Add to that that any international investigation into cyber crime becomes an instant political hot potato due to the prevalent political rhetoric around state sponsored actors and you have an environment where the treat of actual capture/punishment is extremely low.
  - spicybright 5y ago
    This always fascinates me. If you have wallets you know are bad, and wallets you know are good, how can you launder anything if you can trace every transaction down?
    - Stranger43 5y ago
      The way it one of the ways it work is that Vlad the blackmailer buys a bunch of digital artwork from Irina the artist using bitcoin, who then convert the bitcoin to cash in order to purchase something for her husband Vlad the legitimate businessman. And because none of the wallets aren't accurately linked to real persons all tree actors in the above transaction could be the same entity with 3 distinct fictional personas. Add to that that the former soviet block is littered with regions where nobody really agrees on who the legitimate government is and where the entire economy happens using foreign currency, there is plenty of ways to deliberately block investigations from simply following the money trail.
      - esyir 5y ago
        Yes, then all three wallets get tagged.
    - gzer0 5y ago
      It is relatively easy to obfuscate the origin of your Bitcoin with multiple interpretations. The term to search for this is "CoinJoin" [1]. "CoinJoin requires multiple parties to jointly sign a digital smart contract to mix their coins in a new Bitcoin transaction, where the output of the transaction leaves the participants with the same number of coins, but the addresses have been mixed to make external tracking difficult." For example, the service Whirpool [2] cycles users' Bitcoin numerous times; the end result is one which can be interpreted 1,496 different ways. [1]. https://www.investopedia.com/terms/c/coinjoin.asp https://www.investopedia.com/terms/c/coinjoin.asp [2]. https://samouraiwallet.com/whirlpool https://samouraiwallet.com/whirlpool
      - JumpCrisscross 5y ago
matheusmoreira 5y ago
It depends on which blockchain it is. For example, on the Monero blockchain every transaction is signed by at least 11 keys and there's no way to figure out which key actually authorized the transfer.
- KMag 5y ago
  I'm familiar with how ring signatures work, but haven't looked into how the rest of the Monero anonymity works. In order to expand the search space, presumably some of those keys used in the ring signature need to be from people completely unknown to the signer. I take it that a person just finds a few random strangers' public keys with previous history, and gives them signing power over the coin. Those strangers just have no way of knowing they have signing power because the ring is represented in the unspent coin by its hash. Is that correct? In order to spend a coin, however, the ring needs to be revealed. How is the race condition resolved where those strangers could see there's a pending transaction for a coin they could spend. Can't those strangers just see the transaction and pay a huge mining fee to jump the queue and spend the coin first?
  - tromp 5y ago
    There's no signing power. A ring signature is just a signature made with a set of public keys for one of which you know the corresponding private key.
    - KMag 5y ago
      Edit: nevermind https://www.getmonero.org/resources/moneropedia/ringsignatures.html https://www.getmonero.org/resources/moneropedia/ringsignatur... cleared it up. Zero-knowledge proofs/cryptographic accumulators are used to verify each coin is spent at most once. Any of 11 coins could have been spent, each owned by a different single key. For some reason, I thought Monero was basically ZCash plus using ring signatures to make traffic analysis much more difficult even if the zk proof system were broken. I was completely mistaken. Edit 2: Sorry droffel, I wasn't fast enough editing away my old understanding of how it worked and asking what I was missing. Thanks for the explanation.
fredgrott 5y ago
key collisions in the chain unmask the nodes of the chain as far as who it is. LEOs pay millions dollars yearly to have firms do this type of white hacking of using key collisions to unmask crypto coin users. If you use Google you can find the more than 20 firms that offer their services to LEOs to do this. Key size was based on number of users not number of transactions big mistake!
echelon 5y ago
Seems like the US government could force the Bitcoin devs to lock down any transactions to and from the illicit addresses with a code change to the client. If they don't comply, make crypto illegal and topple the mining rigs. Permanently kill illegal addresses.
- JohnJamesRambo 5y ago
  That isn’t how any of that works. That’s the beauty of decentralization.
  - generj 5y ago
    The US government can compel nearly every financial institution in the world to stop trading crypto coins for fiat, overnight, as an executive action. Yes crypto is theoretically decentralized, but in practical terms it is remarkably centralized - very similar to the Internet’s supposed decentralization. There would be a limited black market but the value of crypto coins would fall to nearly zero. Certainly crypto would be much less attractive as a means of transferring illicit money.
    - JohnJamesRambo 5y ago
      https://en.wikipedia.org/wiki/Streisand_effect https://en.wikipedia.org/wiki/Streisand_effect Humans want what they cannot have and the government saying you can't have crypto would be the ultimate sign you need crypto. See India and China "bans" on crypto.
rocqua 5y ago
If you can trace the payment to Russia, and Russia refuses to do anything with the criminals, they are safe. The advantage of blockchain payment is that no-one can reverse the transaction once they found out it was illegal. No-one can block the transaction, or prevent it either.
- tolbish 5y ago
  Intelligence organizations would still be able to identify and surveil regions of past criminal activity.

rawtxapp 5y ago

> A Russian-speaking ransomware syndicate > The Babuk group said on its website late Monday I don't think they care about it being untraceable, they can dump it on a non-US exchange, they probably care about it being un-censorable. That said, the article doesn't mention if they want the payment in crypto (presumably they do).

tolbish 5y ago
The linked article said Bitcoin.

TheSpiceIsLife 5y ago

I'm no expert, but isn't a public blockchain only pseudonymous? Bitcoin, for example, doesn't claim to be an anonymous payment system.

chrisco255 5y ago
There are blockchains like Zcash and Monero that are anonymous.
Stranger43 5y ago
Yes but there is no existing way to poison illegitimately gained bitcoins as not eligible for use with legitimate purchases even though it's totally possible to trace each and every bitcoin used to pay a ransom. In addition there is no 3rd party verification of the wallet owners so in practice there is plenty of ways to whitewash dirty bitcoin into clean currency, especially in economies with an large black/gray sector. Add to that that any international investigation into cyber crime becomes an instant political hot potato due to the prevalent political rhetoric around state sponsored actors and you have an environment where the treat of actual capture/punishment is extremely low.
- spicybright 5y ago
  This always fascinates me. If you have wallets you know are bad, and wallets you know are good, how can you launder anything if you can trace every transaction down?
  - Stranger43 5y ago
    The way it one of the ways it work is that Vlad the blackmailer buys a bunch of digital artwork from Irina the artist using bitcoin, who then convert the bitcoin to cash in order to purchase something for her husband Vlad the legitimate businessman. And because none of the wallets aren't accurately linked to real persons all tree actors in the above transaction could be the same entity with 3 distinct fictional personas. Add to that that the former soviet block is littered with regions where nobody really agrees on who the legitimate government is and where the entire economy happens using foreign currency, there is plenty of ways to deliberately block investigations from simply following the money trail.
    - esyir 5y ago
      Yes, then all three wallets get tagged.
  - gzer0 5y ago
    It is relatively easy to obfuscate the origin of your Bitcoin with multiple interpretations. The term to search for this is "CoinJoin" [1]. "CoinJoin requires multiple parties to jointly sign a digital smart contract to mix their coins in a new Bitcoin transaction, where the output of the transaction leaves the participants with the same number of coins, but the addresses have been mixed to make external tracking difficult." For example, the service Whirpool [2] cycles users' Bitcoin numerous times; the end result is one which can be interpreted 1,496 different ways. [1]. https://www.investopedia.com/terms/c/coinjoin.asp https://www.investopedia.com/terms/c/coinjoin.asp [2]. https://samouraiwallet.com/whirlpool https://samouraiwallet.com/whirlpool
    - JumpCrisscross 5y ago

matheusmoreira 5y ago

It depends on which blockchain it is. For example, on the Monero blockchain every transaction is signed by at least 11 keys and there's no way to figure out which key actually authorized the transfer.

KMag 5y ago
I'm familiar with how ring signatures work, but haven't looked into how the rest of the Monero anonymity works. In order to expand the search space, presumably some of those keys used in the ring signature need to be from people completely unknown to the signer. I take it that a person just finds a few random strangers' public keys with previous history, and gives them signing power over the coin. Those strangers just have no way of knowing they have signing power because the ring is represented in the unspent coin by its hash. Is that correct? In order to spend a coin, however, the ring needs to be revealed. How is the race condition resolved where those strangers could see there's a pending transaction for a coin they could spend. Can't those strangers just see the transaction and pay a huge mining fee to jump the queue and spend the coin first?
- tromp 5y ago
  There's no signing power. A ring signature is just a signature made with a set of public keys for one of which you know the corresponding private key.
  - KMag 5y ago
    Edit: nevermind https://www.getmonero.org/resources/moneropedia/ringsignatures.html https://www.getmonero.org/resources/moneropedia/ringsignatur... cleared it up. Zero-knowledge proofs/cryptographic accumulators are used to verify each coin is spent at most once. Any of 11 coins could have been spent, each owned by a different single key. For some reason, I thought Monero was basically ZCash plus using ring signatures to make traffic analysis much more difficult even if the zk proof system were broken. I was completely mistaken. Edit 2: Sorry droffel, I wasn't fast enough editing away my old understanding of how it worked and asking what I was missing. Thanks for the explanation.

fredgrott 5y ago

key collisions in the chain unmask the nodes of the chain as far as who it is. LEOs pay millions dollars yearly to have firms do this type of white hacking of using key collisions to unmask crypto coin users. If you use Google you can find the more than 20 firms that offer their services to LEOs to do this. Key size was based on number of users not number of transactions big mistake!

echelon 5y ago

Seems like the US government could force the Bitcoin devs to lock down any transactions to and from the illicit addresses with a code change to the client. If they don't comply, make crypto illegal and topple the mining rigs. Permanently kill illegal addresses.

JohnJamesRambo 5y ago
That isn’t how any of that works. That’s the beauty of decentralization.
- generj 5y ago
  The US government can compel nearly every financial institution in the world to stop trading crypto coins for fiat, overnight, as an executive action. Yes crypto is theoretically decentralized, but in practical terms it is remarkably centralized - very similar to the Internet’s supposed decentralization. There would be a limited black market but the value of crypto coins would fall to nearly zero. Certainly crypto would be much less attractive as a means of transferring illicit money.
  - JohnJamesRambo 5y ago
    https://en.wikipedia.org/wiki/Streisand_effect https://en.wikipedia.org/wiki/Streisand_effect Humans want what they cannot have and the government saying you can't have crypto would be the ultimate sign you need crypto. See India and China "bans" on crypto.

rocqua 5y ago

If you can trace the payment to Russia, and Russia refuses to do anything with the criminals, they are safe. The advantage of blockchain payment is that no-one can reverse the transaction once they found out it was illegal. No-one can block the transaction, or prevent it either.

tolbish 5y ago
Intelligence organizations would still be able to identify and surveil regions of past criminal activity.