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USAA Exploring Bitcoins

May 20, 2015 by  
Filed under Around The Net

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USAA, a San Antonio, Texas-based financial institution serving current and former members of the military, is researching the underlying technology behind the digital currency bitcoin to help make its operations more efficient, a company executive said.

Alex Marquez, managing director of corporate development at USAA, said in an interview that the company and its banking, insurance, and investment management subsidiaries hoped the “blockchain” technology could help decentralize its operations such as the back office.

He said USAA had a large team researching the potential of the blockchain, an open ledger of a digital currency’s transactions, viewed as bitcoin’s main technological innovation. It lets users make payments anonymously, instantly, and without government regulation.

The blockchain ledger is accessible to all users of bitcoin, a virtual currency created through a computer “mining” process that uses millions of calculations. Bitcoin has no ties to a central bank and is viewed as an alternative to paying for goods and services with credit cards.

“We have serious interest in the blockchain and we think the technology would have an impact on the organization,” said Marquez. “The fact that we have such a large group of people working on this shows how serious we are about the potential of this technology.”

USAA, which provides banking, insurance and other products to 10.7 million current or former members of the military, owns and manages assets of about $213 billion.

Marquez said USAA had no plans to dabble in the bitcoin as a currency. Its foray into the blockchain reflects a trend among banking institutions trying to integrate bitcoin technology into their systems. BNY Mellon and UBS have announced initiatives to explore the blockchain technology.

Most large banks are testing the blockchain internally, said David Johnston, managing director at Dapps Venture Fund in San Antonio, Texas. “All of the banks are going through that process of trying to understand how this technology is going to evolve.”

“I would say that by the end of the year, most will have solidified a blockchain technology strategy, how the bank is going to implement and how it will move the technology forward.”

USAA is still in early stages of its research and has yet to identify how it will implement the technology.

In January this year, USAA invested in Coinbase, the biggest bitcoin company, which runs a host of services, including an exchange and a wallet, which is how bitcoins are stored by users online.

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Silk Road 2.0 Shutdown

November 20, 2014 by  
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U.S. governmnent authorities said they have shut down the successor website to Silk Road, an underground online drug marketplace, and charged its alleged operator with conspiracy to commit drug trafficking, computer hacking, money laundering and other crimes.

Blake Benthall, 26, was arrested last Wednesday in San Francisco and was expected to make an initial court appearance in federal court there later on Thursday.

The charges against Benthall carry a maximum sentence of life in prison.

A lawyer for Benthall could not immediately be identified.

Silk Road 2.0 was launched late last year, weeks after authorities had shuttered the original Silk Road website in October and arrested its alleged owner, Ross Ulbricht, who went by the online alias, Dread Pirate Roberts.

“Let’s be clear – this Silk Road, in whatever form, is the road to prison,” Manhattan U.S. Attorney Preet Bharara, whose office is prosecuting both cases, said in a statement.

Benthall, known as “Defcon” online, became the operator of Silk Road 2.0 in December, one month after an unnamed co-conspirator launched the site, according to prosecutors.

Silk Road 2.0 provided an online bazaar where users across the world could buy and sell drugs, computer hacking tools and other illicit items, using the digital currency Bitcoin as payment, authorities said.

As of September, the site was generating at least $8 million a month in sales, they said.

The government’s investigation included an undercover agent who was able to infiltrate the administrative staff of the website and interact directly with Benthall, prosecutors said.

Ulbricht, 30, has pleaded not guilty and is scheduled for trial in New York in January.

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Bitcoin Use Growing

September 8, 2014 by  
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Bitcoin is gaing greater acceptance at U.S. online merchants including Overstock.com and Expedia, as customers use a digital currency that just a few years ago was virtually unknown but is now showing some staying power.

Though sales paid for in bitcoin so far at vendors interviewed for this article have been a fraction of one percent, they expect that as acceptance grows, the online currency will one day be as ubiquitous as the internet.

“Bitcoin isn’t going anywhere; it’s here to stay,” said Michael Gulmann, vice president of global products at Expedia Inc. in Seattle, the largest online travel agent. “We want to be there from the beginning.” Expedia started accepting bitcoin payments for hotel bookings on July 11.

Until recently a niche alternative currency touted by a fervent group of followers, bitcoin has evolved into a software-based payment online system. Bitcoins are stored in a wallet with a unique identification number and companies like Coinbase and Blockchain can hold the currency for the user.

When buying an item from a merchant’s website, a customer simply clicks on the bitcoin option and a pop-in window appears where he can type in his wallet ID number.

Still, broad-based adoption of bitcoin is at least five years away because most consumers still prefer to use credit cards, analysts said.

“Bitcoin is a new way of making payments, but it’s not solving a problem that’s broken,” said George Peabody, payments consultant at Glenbrook Partners in Menlo Park, California. “Retail payments aren’t broken.”

There are also worries about bitcoin’s volatility: its price in U.S. dollars changes every day.

That risk is borne by the consumer and the bitcoin payment processor, such as Coinbase or Bitpay, not the retailer. The vendor doesn’t hold the bitcoin and is paid in U.S. dollars. As soon as a customer pays in bitcoin, the digital currency goes to the payment processor and the processor immediately pays the merchant, for a fee of less than 1 percent.

“We don’t have to deal with the actual holding of the bitcoin: it’s the payment processor that takes the currency risk for us,” said Bernie Han, chief operating officer at Dish Network Corp, in Englewood, Colorado. “That’s what makes it appealing for us and I guess for other merchants as well.”

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Cryptolocker Infects 250K Systems

December 31, 2013 by  
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DELL’s security research team has revealed that a new form of ransomware, dubbed “Cryptolocker” has managed to infect up to 250,000 devices, stealing almost a million dollars in Bitcoins.

“Based on the presented evidence, researchers estimate that 200,000 to 250,000 systems were infected globally in the first 100 days of the CryptoLocker threat,” Dell announced in a Secureworks post.

The firm worked out that if the Cryptolocker ransomware threat actors had sold its 1,216 total Bitcoins (BTC) that they collected from September this year, immediately upon receiving them, they would have earned nearly $380,000.

“If they elected to hold these ransoms, they would be worth nearly $980,000 as of this publication based on the current weighted price of $804/BTC,” Dell said.

Cryptolocker is unique when compared against your average ransomware. Instead of using a custom cryptographic implementation like many other malware families, Cryptolocker uses third-party certified cryptography offered by Microsoft’s CryptoAPI.

“By using a sound implementation and following best practices, the malware authors have created a robust program that is difficult to circumvent,” Dell said.

Conventionally, ransomware prevents victims from using their computers normally and uses social engineering to convince them that failing to follow the malware authors’ instructions will lead to real-world consequences. These consequences, such as owing a fine or facing arrest and prosecution, are presented as being the result of a fabricated indiscretion such as pirating music or downloading illegal pornography.

“Victims of traditional forms of ransomware could ignore the demands and use security software to unlock the system and remove the offending malware,” Dell explained. “Cryptolocker changes this dynamic by aggressively encrypting files on the victim’s system and returning control of the files to the victim only after the ransom is paid.”

Dell said that the earliest samples of Cryptolocker appear to have been released on 5 September this year. However, details about its initial distribution phase are unclear.

“It appears the samples were downloaded from a compromised website located in the United States, either by a version of Cryptolocker that has not been analysed as of this publication, or by a custom downloader created by the same authors,” Dell added.

Dell seems to think that early versions of Cryptolocker were distributed through spam emails targeting business professionals as opposed to home internet users, with the lure often being a ‘consumer complaint’ against the email recipient or their organisation.

Attached to these emails would be a ZIP archive with a random alphabetical filename containing 13 to 17 characters, containing a single executable with the same filename as the ZIP archive but with an EXE extension, so keep your eye out for emails that fit this description.

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