Iâve started to notice an unfortunate rhythm to the news flow over the course of any given week in 2021: there is usually some sort of report that an entity was hit by a ransomware attack.
If we go back in our minds a few years, ransomware seemed far more âexotic.â It existed, but many people and many companies had logical reasons to believe it was far removed from their operations.
In 2021, itâs become clear that ransomware can impact any business at any time.
Colonial Pipeline: Ransomware Crosses the Rubicon
We may look back on 2021 and view the Colonial Pipeline attack as the moment that galvanized a coherent U.S. policy and enforcement response to ransomware.
As of this writing, this was the largest single impact on the U.S. energy system that weâve seen from a cyberattack, with officials noting that the consequences have a similar feel to a severe hurricane or weather event that causes physical damage1.
To recap: The Colonial Pipeline is roughly 5,500 miles long and is the largest refined products pipeline in the U.S., supporting about 45% of East Coast fuel consumption. It runs from the Houston, Texas, area on the Gulf Coast up to the New York metro area.
The actual ransomware attack hit Colonialâs information technology systems, but as a precautionary measure the firm shut down its operational technology systems because it was uncertain in the early hours how deeply the attack could spread2.
It is the case today that most ransomware attacks, even if they hit industrial targets, impact information technology systems as opposed to operational technology systems. Ransomware experts are seeing an uptick in the targeting of industrial control systems, but a critical point is that many such targets do not have high connectivity between information technology and operational control. It is not always a simple matter for malware to jump from the IT side to the operational side.Â
DarkSide: Victim of the Publicity Paradox
Within the ransomware world, anonymity is one of the most-prized assets.
DarkSide, widely viewed as producing the specific malware used in the Colonial Pipeline attack, views ransomware as a business. Cybereason estimates that its malware has been used to compromise more than 40 victims, demanding figures between $200,000 and $2 million in each case. However, the group is not unconcerned with its reputation, declaring publicly that it would not target health care systems, schools or businesses that it believes cannot pay ransoms3.
During the COVID-19 pandemic,Â cloud computingÂ and the concept ofÂ âSoftware-as-a-Serviceâ (SaaS)Â have proliferated. DarkSide is seeking to be a player in âRansomware-as-a-Service.â The organization is offering its software on loan to criminal organizations, and it is actually those organizations that turn around and use the software.4
The most profitable, long-run strategy for DarkSide would be to remain in the shadows. A consequence of the Colonial Pipeline attack was the awakening of the fully unified force of the U.S. Justice Department and Biden administration, making âDarkSideâ almost a household name. It was even reported that the group would be disbanding as a result of events surrounding this attack.Â
To Pay or Not to PayâThat Is the Question
To hear the FBI advice, the view is apparently ânever pay.â If every victim perfectly adhered to this advice, then it would be impossible for a ransomware attacker to make money. Ransomware attackers have an oddly rational stance, in the sense that while many victims might feel âunlucky,â it is much more likely that targets are researched in detail.
Why? If the criminal organizations are going to make the effort, they want to ensure the maximum chance that they will receive a payday.
The CEO of the Colonial Pipeline did opt to pay the ransom, which was roughly 75Â Bitcoin, valued at the time as roughly $4.4 million.5Â While companies paying ransoms does encourage further ransomware, it is very difficult to make this decision when you are in the position of power or influence at an affected firm. Depending on the circumstances, it is possible that not paying could lead to months of service outages and the utter impossibility of ever recovering certain data.
To be fair, paying doesnât always guarantee a favorable result, but each company has to approach this decision in its own way.
It is recommended that, in all cases, victims of ransomware work with an expert firm of some sort, like FireEye, and that they also notify the FBI of their situation.
Is Bitcoin or Cash More Anonymous for Criminal Purposes?
When Satoshi Nakamotoâs white paper came out, introducing Bitcoin to the world, one of the virtues of the new cryptocurrency widely touted was anonymity. Itâs possible that this was truer in Bitcoinâs earlier times than at presentâmarket participants now understand that if being anonymous is the critical desire, other cryptocurrencies may exceed Bitcoinâs capabilities. Experts have indicated that transactions on the blockchain create âdigital breadcrumbsâ that authorities can then follow.6
In the case of the Colonial Pipeline attack, roughly 64 of the 75 Bitcoin were seized by authorities. That means that they were able to trace the specific on-chain activities related to the attack to find the digital wallet associated with DarkSide and then obtain the appropriate public and private keys to make the seizure.
While the details behind every step of this process have not all been publicized, itâs notable that this all happened within about a month of the initial attack and payment.7
When criminals use cash and international bank accounts, authorities need to go through many layers of lawyers and bureaucracy to make seizures. This can take months or even years depending on the situation. Authorities, duly motivated, do not face such lawyers or such bureaucracies on the blockchain, so seizures may occur faster in certain cases.
Cybersecurity: The Megatrend Everyone Must Consider
Megatrends are being âcreatedâ all the time. Some will persist and survive, while others will not.
Consider a scenario, however. One business is saying that it prefers not to focus on artificial intelligence. We may have our own opinions on this statementâbut in the end, it may be the case thatÂ AIÂ would have only limited value, depending on the details.
However, now picture a firm saying that it prefers not to focus on cybersecurity. Does it have computers? Email? A network? Not focusing on AI could be an interesting debate, whereas not focusing on cybersecurity is a serious business risk. We may not know which services companies will use, but we do know that a lack of focus is irresponsible, and possibly even reckless.
Itâs important to keep the current landscape in mind:
- Mandiant, a cybersecurity response firm, has reported ransomware response frequency increasing 10 times from 2018 to 2020.
- Mandiant has reported that the average demand has been anywhere from $250,000 to $50 million.8
- Mandiantâs figures indicate that one in ten businesses is forced to close once it is a victim of a ransomware attack.
- Infrastructure-as-a-Service (IaaS)Â andÂ Platform-as-a-Service (PaaS)Â are estimated to see global revenues around $217.7 billion by 2023 as cloud computing massively proliferates. However, worldwide hybrid cloud security spending is estimated to reach $2.0 billion by 2023. âDonât forget cloud securityâ is a phrase the comes to mind from this statistic.9Â
Aligning an investment thesis with theÂ growth of cybersecurity could be a very interesting proposition in 2021.
Originally published by WisdomTree, 6/17/21
1Â Source: Andy Greenberg, âThe Colonial Pipeline Hack is a New Extreme for Ransomware,â WIRED, 5/8/21.Â
2Â Source: Colin Eaton and Dustin Volz, âU.S. Pipeline Cyberattack Forces Closure,â Wall Street Journal, 5/8/21.Â
3Â Source: Lily Hay Newman, âDarkSide Ransomware Hit Colonial Pipelineâand Created an Unholy Mess,â WIRED, 5/10/21.Â
4Â Source: Lily Hay Newman, âDarkSide Ransomware Hit Colonial Pipelineâand Created an Unholy Mess,â WIRED, 5/10/21.Â Â
5Â Source: Collin Eaton, âColonial Pipeline CEO Tells Why He Paid Hackers a $4.4 Million Ransom.â Wall Street Journal, 5/19/21.Â
6Â Source: Nicole Perlroth, Erin Griffith and Katie Benner, âPipeline Investigation Upends Idea That Bitcoin Is Untraceable,â The New York Times, 6/9/21.Â
7Â Source: Nicole Perlroth, Erin Griffith and Katie Benner, âPipeline Investigation Upends Idea That Bitcoin Is Untraceable,â The New York Times, 6/9/21.Â
8Â FireEye 2021 Corporate Presentation.
9Â Source: CrowdStrike Corporate Overview, March 2021.Â
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