U.S. Justice Department Indicts Russians Who Used Bitcoin to Interfere in 2016 Presidential Election

Omar Faridi
  • Russian nationals were charged with federal crimes involving interference with the US 2016 presidential elections.
  • 12 Russian intelligence officers were charged with using Bitcoin to buy servers used for hacking US government computers.

The US Justice Department announced on Friday an indictment charging twelve Russian citizens for attempting to use Bitcoin (BTC) to engage in money laundering activities. The accused, according to the indictment brought forward by the Special Counsel’s Office, used the cryptocurrency to hide their alleged involvement in interfering with the 2016 U.S. presidential elections.

Reportedly, the accused are members of Russia’s Main Intelligence Directorate (GRU) and have been charged with trying to hack the US Democratic Congressional Campaign Committee’s servers.

The GRU officials, who’re part of the Russian military, have also been indicted on charges of engaging “in a sustained effort to hack” the Democratic National Committee’s (DNC) private databases. All twelve defendants have been accused of trying to unlawfully gain access to confidential information related to former US Secretary of State Hillary Clinton’s presidential campaign.

Defendants “Conspire To Hack” Government Servers

It’s believed that through these data breaches, the accused Russian officers leaked classified information and labeled it as “Guccifer 2.0” and “DCLeaks.” These incidents can be traced back to July 2016 when the DNC revealed that their computer systems had been infiltrated by two different Russian entities known as “Cozy Bear” and “Fancy Bear.”

The Russian hackers then reportedly went on to share thousands of DNC’s confidential messages with Guccifer 2.0, a Romanian hacking group. Soon after this, compromised classified information was posted on WikiLeaks.

US Special Counsel Robert Mueller was quick to follow up on these incidents and now all twelve of the Russian military’s intelligence officers have been indicted by District of Columbia’s grand jury.

Charges levied against the defendants include interfering with the US state boards of election and obtaining unauthorized access to private information belonging to the secretaries of state by “conspir[ing] to hack into [their] computers.” Charges also include tampering with elections software, although it isn’t clear whether the hackers influenced the electoral voting process.

Notably, Mueller’s investigation suggests that the accused used spear-phishing attacks, which are fraudulent emails sent from compromised accounts of trusted senders with the intention of obtaining confidential information from unsuspecting recipients. “X-Agent” (or “Sofacy”), the tool allegedly used for spear-phishing, is believed to also have been used by other Russian hackers reportedly linked to the GRU.

Bitcoin Used To Buy Servers

Interestingly, in a possible attempt to prevent these crimes from being traced back to them, the Russian hackers bought bitcoin and used the pseudonymous cryptocurrency to purchase servers and other computer accessories.

 The computing hardware is believed to have been used to help them infiltrate private US government networks. In addition to being charged for influencing and interfering with the 2016 US presidential elections, the accused have been charged with using bitcoin to engage in money laundering activities.

The federal level indictment consists of 11 criminal counts with Count Ten alleging that the Russian intelligence officials. It reads

“[The] Defendants conspired to launder the equivalent of more than $95,000 through a web of transactions structured to capitalize on the perceived anonymity of cryptocurrencies such as bitcoin."

DOJ

Weekly Newsletter

Bitpoint Reveals Breakdown of Funds Stolen and Pledges Reimbursement After Hack

Neil Dennis

Japan's Bitpoint cryptocurrency exchange has published a breakdown of the assets lost in this month's security breach where hackers stole around Y3 billion ($28 million), and has pledged to reimburse customers.

A document published by parent company Remix Point on Tuesday showed that of the Y3.02 billion stolen, Y2.6 billion belonged to customers, while Y960 million were company-owned assets.

Here's the full breakdown:

  • Bitcoin BTC1,225 - total stolen worth Y1.53 billion at the time of attack: Y1.28 billion belonging to customers and Y250 million to the exchange
  • Bitcoin cash BCH1,985 - worth Y70 million at time of attack: Y40 million customer owned and Y30 million exchange owned
  • Ether ETH11,169 - worth Y330 million at time of attack: Y240 million customer owned and Y90 million of exhange's
  • Litecoin LTC5,108 - worth Y500 million, with about Y40 million in customer funds
  • XRP28,106,323 - worth Y1.03bn at the time of attack of which around a quarter were customer funds

Reimbursement

Remix Point added in its Tuesday statement that it would reimburse customer losses, compensating them in lost cryptocurrencies rather than their fiat equivalent.

The exchange revealed on Sunday it had already tracked $2.3 million worth of stolen tokens. Reported by Finance Magnates Bitpoint said it had recovered the funds and reabsorbed them.

Bitpoint said last week's security breach occurred due to unauthorized access to private keys of its hot wallets and now intends to move all holding into cold storage, where no breaches of security had been detected.

Co-operation With Regulators

Remix Point said in the document published on Tuesday that it was co-operating with self-regulatory body, the Japan Virtual Currency Exchange Association, to help establish better security measures across the industry.

It requested the association, along with its exchange rivals, monitor any suspicious activity in the coming days that might involve the deposit of funds potentially associated with the incident.