How the spies hid behind bitcoin

In early 2016, Russian intelligence officers obtained a new pool of the virtual currency Bitcoin. They quickly put the digital money to work.

The Russian spies used some of the Bitcoins to pay for the registration of a website, dcleaks.com, where they would later post emails that had been stolen from Hillary Clinton’s presidential campaign. When the operatives needed a computer server to host the dcleaks site, they paid for that with Bitcoins as well.

The transactions were detailed in an indictment from the Justice Department. The indictment provided one of the clearest illustrations to date of the inner workings of the Russian operation that carried out the hacking of the Democratic Party and other targets. It also showed how cryptocurrencies — and the anonymity they provide — have become both a tool and a challenge for intelligence agencies in the battles between nation states.

“This is the first clear example in court documents of cryptocurrency being used to purchase capabilities that could be leveraged in attacks on national security,” said Jonathan Levin, a co-founder of Chainalysis, a firm that helps governments track cryptocurrency payments.

Financial transactions have been one of the trickiest parts of intelligence operations because electronic payment networks and checks are generally off limits to undercover spies. That has led to famous scenes of covert exchanges of suitcases full of cash. The Bitcoin network allows anyone to move millions of dollars across the world without any in-person meetings, and without the approval of any financial institutions. 

While the Russians accused of attacking Clinton’s campaign also used traditional currencies, the indictment said they had “principally used Bitcoin when purchasing servers, registering domains and otherwise making payments in furtherance of hacking activity”.

Bitcoin, the indictment added, “allowed the conspirators to avoid direct relations with traditional financial institutions, allowing them to evade greater scrutiny of their identities and sources of funds.”

The Russians took several steps to obscure their Bitcoin transactions, according to the indictment. They bought some Bitcoins on so-called peer-to-peer exchanges, where buyers and sellers can interact directly without exchanges collecting details on either side.

The Russians also created Bitcoins themselves through the process known as mining, the indictment said. 

©2018 The New York Times News Service




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