Canadian insurer paid for ransomware decryptor. Now it's hunting the scum down

A curious tale of Bitcoin exchanges and the High Court


A Canadian insurance business struck by ransomware paid off the crooks via a cyber insurance policy – and their English reinsurers, having shelled out 109.25 Bitcoins, want it back from the alleged blackmailers.

After infection the unnamed Canadian company suffered a total lockdown of all of its systems and asked its reinsurance firm to pay the ransom so it could get back on its feet.

Paying off blackmailers holding a company to ransom is never advisable. Despite a negotiation that knocked the crooks down from an initial demand of $1.2m to $950k, the decryption tool provided had to be run on each and every affected device on the company's network.

It took five days to decrypt 20 servers and "10 business days" to unlock 1,000 desktop computers.

Neither company was going to pay out and forget the incident. The English reinsurer hired Chainalysis Inc, a "blockchain investigations firm", which eventually pinpointed the people responsible.

Although the full judgment was de-anonymised in January, having originally been handed down in December 2019, the judge did not lift an anonymity order on both the Canadian and English insurance companies. The latter, the plaintiff in the case, is designated as "AA" in the decision, while the "persons unknown who demanded Bitcoin", and "persons unknown who own/control specified Bitcoin" are classified as defendants 1 and 2. Two companies who operate a cryptocurrency exchange are designated defendants 3 and 4. Reporting restrictions have now been lifted.

Mr Justice Bryan of London's High Court said: "Whilst some of the Bitcoin was transferred into 'fiat currency' as it is known, a substantial proportion of the Bitcoin, namely, 96 Bitcoins, were transferred to a specified address. In the present instance, the address where the 96 Bitcoins were sent is linked to the exchange known as Bitfinex operated by the third and fourth defendants."

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Bitfinex is a cryptocurrency exchange headquartered in the British Virgin Islands, though the court noted that one email address associated with the exchange was seemingly traced to China.

Mr Justice Bryan said: "At the present time there is no evidence that [Bitfinex] are themselves perpetrators of the wrongdoing, rather, it is said, they have found themselves the holder of someone else's property."

Nonetheless, the judge ruled that Bitfinex probably knew who the two alleged ransom receivers were, saying: "I have no doubt that Bitfinex has the ability to access its records and its KYC [know your customer, finance sector ID rules] material to identify the information that is sought" about the two alleged blackmailers.

In a statement Stuart Hoegner, Bitfinex's general counsel, told The Register: "Bitfinex has robust systems in place to allow it to assist law enforcement authorities and litigants in cases such as this. In this case we have assisted the Claimant to trace the stolen Bitcoin and we understand the focus of the Claimant's attention is no longer on the Bitfinex platform. It now appears Bitfinex is an entirely innocent party mixed up in this wrongdoing."

Payoffs are bad but we gotta be realistic

In October 2019 the American FBI softened its stance on paying off ransomware. At least one prominent infosec firm, Malwarebytes, reckons refusing to pay in all circumstances probably doesn't make a difference in this day and age.

Such a course of action is fraught with danger, however. A Scottish MSP was caught red-handed promising ransomware decryption services when in reality all they were doing was paying off the crooks and adding an eye-wateringly high margin. At least one study has found that less than half of companies paying off ransomware actually get their files back.

While the investigations in the High Court judgment above seem to be bearing fruit, keep in mind that insurance companies have a virtually guaranteed business model that leaves them drowning in cash. Tracking down crooks is expensive and civil legal action in the High Court comes in at five or six figures, assuming any judgment is enforceable. ®

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