Cryptocurrency continues to grow in popularity as an investment and a form of payment but it still remains vulnerable to the large-scale fraud schemes and that have plagued the industry since its inception.
A U.K. Court has ordered Bitfinex to freeze bitcoin worth $860,000 after the crypto exchange and blockchain firm Chainalysis traced the funds to a ransomware payment. The judgment is believed to be the first of its kind in finding that cryptocurrencies can be targeted for a proprietary injunction under English common law.
The victim of the ransomware attack had paid $950,000 in bitcoin to the perpetrator through an insurance company, according to a filing England and Wales High Court (Commercial Court). While some of the bitcoin was converted into fiat currency, the remainder appears to have been sent to an address on the Bitfinex platform.
The victim, an unnamed firm, had been told to pay $1.2 million in bitcoin after its computers were hijacked by ransomware. The company’s insurer, which filed the court claim, ultimately paid $950,000 in the form of 109.25 BTC, according to the filing. While some of these funds were converted into fiat and are not traceable, 96 BTC were sent to an address owned by Bitfinex.
Hackers managed to bypass the firm’s firewall and anti-virus software in October to install BitPaymer, a malware that encrypted the company’s computer systems and thus prevented it from running its business.
In a statement, Chainalysis Director of Communications Maddie Kennedy said “a leading cyber insurer used Chainalysis software to investigate ransomware payments made on behalf of their clients and trace the flow of funds from the point of extortion to known services such as exchanges.”