Crypto Blackmail

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Imagine you receive a message – often a pop-up on your computer screen that threatens to unveil your habit of watching pornography or an alleged infidelity. The only way of preventing the perpetrator from telling all of your friends and family members is to pay him off. This is called cryptoblackmail and it’s the newest way that thieves seek to separate people from their cryptocurrency, the virtual online currency.
 
Blackmail is a threat to take some (negative) action if the victim doesn’t pay a certain amount of money. This scam has been around for hundreds of years, as described in the plays of Shakespeare and the stories of Charles Dickens. New technology gives these rip-off artists many new ways to enact their schemes, and a much larger pool of potential victims. And web browsing provides all of the ammunition the scammers need to execute their plans.
 
Cryptoblackmail has only been around since mid-2017 but it has spread very quickly. It requires that the victim pay in Bitcoin or another untracable online currency . Each time it’s posted to a blog or mentioned in the media hundreds more victims come forward asking that to do. What’s interesting is that some victims are getting blackmailed by snail mail, a decidedly retro take on such high-tech thievery.
 
If you’re thinking that cryptocurrency isn’t common enough for that many people to be blackmailed this way, you’re right. Often the blackmailers provide step-by-step instructions for purchasing cryptocurrency so the victim can pay off the perpetrator.
Online pornography is the reason so many people have been affected by this scheme: scammers have installed malware on porn websites that collect information from the victims’ computers through keyloggers. The malware causes a pop-up window to appear, and some version of this message is shown:
 
“Hello. I know that [XYZ] is your password and that you’ve been visiting this porn site frequently. In fact, I was able to take control of your web cam and your address book. If you don’t deposit a Bitcoin payment of $1,900 in my account I will send photos of your online activities to everyone in your address book, including your family, neighbors, and friends.”
 
The scammers count on the motivational value of the shock and potential shame involved in telling your neighbors and family members about your pornography habit (or infidelity, etc). Many people have coughed up the required currency to stop the embarrassing attack and make it go away. Others who ignored the scheme haven’t reported any reprisals, so it is probably safe to ignore. 
Blackmail safety
It’s a simple scheme: by sending a high number of these blackmail threats the scammers are hoping to get even a fraction of people to freak out and pay the money impulsively. It’s not the same threat as ransomware, which used more sophisticated attacks to hold computer systems hostage until a fee is paid. These attacks have disabled many school and municipal computer servers until thousands of dollars were handed over.
 
The password they use in the pop-up, email, or letter is likely one leaked in a past hack, such as Yahoo. That’s why experts warn people not to reuse passwords , to make passwords challenging, to use a password manager, and opt for two-factor authentication.
 
Bitcoin currently inhabits a shady grey area of commerce and regulation. Blackmail is illegal, but trying to find and punish the people responsible for this scheme is challenging at best. They could be anywhere in the world, and the currency itself is loosely regulated. While some reports say you can look up the amount of currency in a particular account it’s unlikely that authorities are able to trace that account to an individual. That’s why Bitcoin has been the preferred currency for hiding illicit transactions online, particularly on the Dark Web’s Silk Road.
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Jul 14, 2018, 6:40 am EDT
| 5 min read




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Here’s how a CryptoBlackmail scam starts: A criminal contacts you over email or snail mail and insists they have evidence you cheated on your wife, there’s an assassin after you, or there’s a webcam video of you watching pornography.
To make the problem go away, the criminal asks for a few thousand dollars in Bitcoin or another cryptocurrency. But you should never respond or pay up. All the criminals have are empty threats, and they’re just trying to trick you.
CryptoBlackmail is any sort of threat accompanied by a demand you pay money to a cryptocurrency address. Like traditional blackmail, it’s just a “pay up or we’ll do something bad to you” threat. The difference is that it demands payment in cryptocurrency.
Here are some examples of CryptoBlackmail:
Bear in mind that the criminals almost certainly can’t follow through on their threat, and they probably doesn’t have the information they claim to have. For example, someone may just send letters saying “I know you cheated on your wife” to a large number of people, knowing that, statistically, many of them have. There almost certainly is not an assassin stalking you, either—especially an assassin who only works for a few thousand dollars! These are all empty threats, and there’s no reason to be scared of them.
Unfortunately, the scammers do trick some people. One scammer made about 2.5 BTC, or $15,500 USD, in the first two days of their scam on July 11 and 12. We know this because Bitcoin transaction records are public, so it’s possible to see how much money was sent to the scammer’s wallet address .
Here’s the most important thing to know: This is not a personally targeted attack. The inclusion of one of your passwords from a breached database may make the threat seem personal, but it isn’t. They’ve just hoovered up your email address and password from a database. Criminals send large numbers of these emails (and even some physical letters,) hoping that just 1% of people will respond and pay up.
This is just like spam emails or tech support scammer phone calls . The criminals know most people won’t fall for their tricks, and they’ll quickly move on to find an easier mark if you aren’t falling for the scam.
Do not negotiate with the criminals, and definitely don’t pay anything. If you receive an email threat like this—especially if it’s an assassination threat!—you might want to report it to the police.
You should definitely report any threats sent as physical mail, too. It’s easier to catch criminals abusing the mail system than simply sending out emails. The US Postal Inspection Service doesn’t mess around.
Here’s an example of CryptoBlackmail:
Here's a new form of cryptoblackmail. A friend received this out of the blue. Presumably, it's getting sent to everyone on the haveibeenpwnd list.
Be careful out there, never pay, never negotiate. pic.twitter.com/VFl5s1duCe
— Emin Gün Sirer (@el33th4xor) July 11, 2018
This type of scam has a lot in common with ransomware like CryptoLocker . Like ransomware, CryptoBlackmail makes a threat and demands payment to a cryptocurrency address. But, while ransomware actually holds your files hostage after compromising your computer, CryptoBlackmail is all empty threats.
CryptoBlackmail requests payment in cryptocurrency for the same reason ransomware does. It’s not possible to “undo” a transaction, and it’s hard for the authorities to track down the owner of a Bitcoin address. If the criminals requested you send money via a bank wire, that wire could be traced and the authorities could try to find the person who opened the bank account and maybe even get the money back. However, with cryptocurrency, the money is gone as soon as you send it.
While all the CryptoBlackmail scams we’ve seen demand you send Bitcoin to BTC (Bitcoin) wallet addresses, there’s nothing stopping criminals from requesting payment in “ altcoins ” like Monero.
You can check to see whether any of your passwords have been compromised using a service like Have I Been Pwned? . However, services like these don’t have every single password database that’s ever been stolen.
It’s best to just use a unique password everywhere so it doesn’t matter if one service suffers a breach. If you re-use the same password everywhere, your other accounts are vulnerable whenever one service leaks your password.
Here’s what you need to do to stay safe:
The most important thing to do—aside from never paying the scammers—is to ensure you aren’t re-using passwords, especially if they’ve already leaked. Use strong, unique passwords and you won’t have to worry about password leaks. Just change a single password whenever there’s a leak—the service that suffered the password breach on will generally force you to change the password, anyway—and you’re done.
Image Source: Gualtiero Boff /Shutterstock.com
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