An Anatomy of Crypto-Enabled Cybercrimes

Abstract

While the advent of cryptocurrencies and digital assets holds promise for improving and disrupting
financial systems by offering cheap, quick, and secure transfer of value, it also opens up new payment channels for cybercrimes. A prerequisite to solving a problem is understanding the nature of the problem. Assembling a diverse set of public, proprietary, and hand-collected data, including dark web conversations in Russian, we conduct the first detailed anatomy of crypto-enabled cybercrimes and highlight relevant economic issues. Our analyses reveal that a few organized ransomware gangs dominate the space and have evolved into sophisticated corporate-like operations with physical offices, franchising, and affiliation programs. Leading ransomware gangs operate from Russian-speaking regions and mainly target U.S. and Western Europe enterprises. Their techniques have become more aggressive, entailing multiple extortion and reputation management layers and leading firms to underreport security breaches. Blanket restrictions on cryptocurrency usage may prove ineffective in tackling crypto-enabled cybercrime and hinder innovations. Instead, blockchain transparency and digital footprints enable effective forensics for tracking, monitoring, and shutting down dominant cybercriminal organizations.

Keywords: Forensic Accounting, Blockchain Analytics, Digital Economy, Cryptocurrency, Cybercrime

JEL Classification: F24, F52, G15, G18, G23, G38, K42