Police Pay Cryptolocker Ransom

From The Herald News:

A computer virus that encrypts files and then demands that victims pay a “ransom” to decrypt those items recently hit the Swansea Police Department.
The department paid $750 for two Bitcoins — an online currency — to decrypt several images and word documents in its computer system, Swansea Police Lt. Gregory Ryan said.

“It was an education for (those who) had to deal with it,” Ryan said, adding that the virus did not affect the software program that the police department uses for police reports and booking photos. . . .

CryptoLocker, a new Windows ransomware virus sweeping across the country, hit the Swansea Police Department on Nov. 6. The virus encrypted several files that could only be decrypted through the purchase of Bitcoins, an unregulated digital currency, to pay for the special “decryption key.” A countdown clock appeared on a computer screen showing how much time the department had to buy the key before all the files were deleted.

Bitcoin Blows Past $600

From CNBC:

Bitcoin touched a fresh all-time high on Monday as the digital currency continued to gain favor with investors.  The virtual currency rose to just under $619 on Mt. Gox exchange Monday afternoon in Asia, up by over 25 percent from the same time on Sunday.

Its latest gains come as the potential for regulation hangs over the market. The U.S. Senate Committee on Homeland Security and Governmental Affairs (HSGAC) is set to begin a hearing at 3.00 p.m. Washington time on Monday. The event will bring representatives from different federal agencies and representatives from the bitcoin community to discuss virtual currencies.

RIAA Complaint Demonstrates Their Incomprehension of Technologies They Oppose

Really, laugh out loud.  From Torrent Freak:

The RIAA alerted the U.S. Government to several notorious pirate websites this week, including The Pirate Bay. While the inclusion of the infamous torrent site doesn’t come as a surprise, the RIAA did raise a novel issue. The music labels point out that The Pirate Bay has embraced the cryptocurrency Bitcoin, which they believe makes it harder to seize and trace the site’s funds. While the former is certainly true, a quick look at TPB’s Bitcoin wallet easily reveals where the donation money is being spent.

Silk Road Shutdown an Opportunity for Black Market Internet Entrepreneurs

Nature abhors a vacuum.  With the shutdown of Silk Road, we are likely to see some copy cats spring up across the web.  From the Guardian:

Although it was certainly the most high profile, Silk Road was not the first illegal marketplace hidden within the dark web or on the open internet.
"Silk Road will almost certainly be replaced by a copycat-like site, as has been the case in carder markets where people trade fraudulent credit card information. Those kinds of places have been shut down in the past and very, very quickly replaced by others," said Rik Ferguson, vice-president of security research at Trend Micro, talking to the Guardian.

Sites similar to Silk Road already exist within the Tor network. Two stores called Atlantis and Sheep Marketplace offer illegal drugs, equipment and services akin to Silk Road.

However, some sites go further – Bitcoin-powered shop called Black Market Road, for instance, also sells illegal weapons, something Silk Road withdrew after high profile shootings in the US.

FBI Seizes Silk Road, Arrests Operator

From The Orlando Sentinel:

U.S. law enforcement authorities have shut down "Silk Road," an anonymous Internet marketplace for illegal drugs like heroin and cocaine and criminal activities such as murder for hire, and arrested its alleged owner.

The Federal Bureau of Investigation said Wednesday it arrested Silk Road owner, Ross William Ulbricht, 29, known online as "Dread Pirate Roberts," in San Francisco on Tuesday, according to court filings.

Ulbricht, who holds an advanced degree in chemical engineering, appeared in federal court on Wednesday and a bail hearing was set for Friday.

Federal Judge Rules that Bitcoin Is Money

A federal judge has ruled that bitcoin is money.  The suit before the court involves the case of Trendon Shavers, who is being prosecuted by the SEC for running what has been called a Bitcoin ponzi scheme.  In response to the SEC action, Shavers argued before the court that the SEC had no jurisdiction in the case because bitcoin is not money.  The court did not agree.  From the ruling:

First, the Court must determine whether the BTCST investments constitute an investment of money. It is clear that Bitcoin can be used as money. It can be used to purchase goods or services, and as Shavers stated, used to pay for individual living expenses. The only limitation of Bitcoin is that it is limited to those places that accept it as currency. However, it can also be exchanged for conventional currencies, such as the U.S. dollar, Euro, Yen, and Yuan. Therefore, Bitcoin is a currency or form of money, and investors wishing to invest in BTCST provided an investment of money.

Ironically, both Bitcoin enthusiasts and detractors see this ruling as a evidence in favor of their own positions.  Enthusiasts state that rulings like this will make the crypto-currency more palatable to the economic mainstream, while its detractors state that this is one more nail in the Bitcoin coffin.  Of course, only time will tell.  But the ruling does not seem to have affected the price of Bitcoin, which is currently trading at just over $100 per BTC.

SEC Cracks Down on Bitcoin Ponzi Scheme

One of the most common and likely ill-informed criticisms of Bitcoin is that the virtual currency is nothing more than a Ponzi scheme.  A minimal amount of research into what Bitcoin is and how it functions should, however, dispel any reasonable doubt that Bitcoin itself is a scam.  Yet that does not mean that Bitcoin cannot be used to construct traditional scams like the Ponzi scheme.  The SEC has filed a suit against one such scammer who operated an enterprise called the Bitcoin Savings and Trust.  From Entrepreneur:

The Securities and Exchange Commission has filed its first fraud lawsuit involving the virtual currency, claiming it was used in a Ponzi scheme.  The SEC filed suit against Trendon T. Shavers, founder and owner of Bitcoin Savings and Trust, saying he raised more than 700,000 BTC from 66 investors. According to the SEC’s suit, that amounted to $4.5 million in cash based on the daily Bitcoin price at the time, according to the SEC. 

Of course, knee jerk detractors of the digital currency will argue that this proves Bitcoin is  nothing more than a scam, as if the structure of such a scheme were internal to Bitcoin itself.  Interestingly, however, this action by the SEC may inadvertently serve to strengthen the Bitcoin market, since it presupposes that the digital currency is a legitimate means of investment in securities, which are regulated by the SEC.  The article notes:

The SEC also took the step of asserting its jurisdiction over virtual-currency trading. “Any investment in securities in the United States remains subject to the jurisdiction of the SEC, regardless of whether the investment is made in U.S. dollars or a virtual currency,” the agency said. 

Beware of Bitcoin Malware

One month ago, one bitcoin was worth around $50.  Today, Bitcoin has surged past the $200 mark, and, as if this writing, is trading at $218 on MtGox, the most popular bitcoin exchange.  There are many different theories floating around out there to explain this explosive growth in price.  By far the most common is the claim that we are in the midst of a massive bubble.  As new money pours into the system – and these days that new money is big money from professional investors – the incentives for scammers, hackers, crooks and the like grow accordingly.  If you are relatively new to Bitcoin, are are relatively new to it, make sure you do your due diligence to secure your wallet and coins, it is certain that there are a great many people out there salivating at the idea of making off with a great deal of coin.  Even if you have no interest in Bitcoin whatsoever, or even think that it is nothing more than a pyramid scheme, as some skeptics do, you should also be cognizant of these potential threats.  From The Next Web:

A new piece of malware propagating across Skype has been discovered that tries to convince the recipient to click on a link. What makes this particular threat different is that it drops a Bitcoin miner application to make the malware author money.  While malware has spread on Skype and mined Bitcoins before, putting the two together could be an effective new strategy. Security firm Kaspersky discovered the threat, which it names Trojan.Win32.Jorik.IRCbot.xkt

Intro to Bitcoin

From Monetarism, an introductory article on Bitcoin:

In February 2013, version 0.8.0 of Bitcoin was released. This virtual payments system is the financial equivalent of Latin, the language with no native speakers. In the case of Bitcoin, though, what you are dealing with is a financial structure with no central bank, no one regulatory body as such, and no physical form.  That may sound odd – so let’s look in more detail at Bitcoin, how it works, and what its future might be . . .

Bitcoin Reaches All-Time High

From CNN:

Bitcoin sounds like something from science fiction: A purely digital currency, created by an anonymous hacker, that operates outside the world's traditional banking systems. The four-year-old currency is very real, though, and it's trading an all-time high, tripling in value in the last two months alone.

One bitcoin is was worth about $40 U.S. dollars on Tuesday, and surged on Wednesday to nearly $49. . . . Because the number of transactions and overall value of coins in circulation is relatively low, the currency is quite volatile -- it went from under $1 to over $28, then back to $7 in 2011 alone. . . .

Bitcoin was created in 2009 by an anonymous developer using the pseudonym "Satoshi Nakamoto" -- the Japanese equivalent of a bland name like "John Smith." It has no central-bank backing. The idea was to create a currency that's free from government intervention and can be used to conduct transactions without hefty exchange or processing fees. . . .

Bitcoin Exchange to Operate as Bank

From Ars Technica:

Bitcoin Central, a Bitcoin exchange that is popular in the eurozone, says it has secured approval from regulators to operate as a bank under French law. The announcement could be another sign of the cryptocurrency's growing legitimacy.
The news was announced in a Thursday post on the Bitcoin forums. A representative for Paymium, the French company that runs Bitcoin Central, said the firm had partnered with the French payment processor Aqoba and the French bank Credit Mutuel to create a Bitcoin-based payment service. Users will be able to deposit funds in either euros or bitcoins, and to easily convert between the two.