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Russians Relied on Bitcoin to Finance Election Hacking, Prosecutors say

The 12 Russians indicted on Friday for conspiracy to interfere in the 2016 presidential election used well-known tactics to penetrate computer systems. To finance the operation, they relied on bitcoin, federal prosecutors said.

The indictment, which stemmed from the investigation of special counsel Robert Mueller, described the activities in a section on money laundering. "The Defendants conspired to launder the equivalent of more than $95,000 through a web of transactions structured to capitalize on the perceived anonymity of cryptocurrencies such as bitcoin," the government indictment claims.

Purchases with bitcoin included computer servers and domain registrations. Prosecutors allege they used bitcoin to help conceal their identity. 

"The use of bitcoin allowed the Conspirators to avoid direct relationships with traditional financial institutions, allowing them to evade greater scrutiny of their identities and sources of funds," the indictment reads.

They used several "dedicated email accounts" to track the bitcoin transactions. One email account named "gfadel47," received bitcoin payment requests from approximately 100 different email accounts, prosecutors said. 

The Russian officers allegedly used fake names, including "Ward DeClaur" and "Mike Long," when purchasing a Malaysian server used to plant malware on networks of the Democratic Congressional Campaign Committee and Democratic National Committee.

"It cost very little money," CNET senior producer Dan Patterson said on CBSN. "What they really invested in was psychological warfare, making sure they could trick people into falling for these spear phishing type of attacks." 

Patterson said it was essentially "a very simple attack" that tricked staffers into clicking on emails from rogue accounts. That enabled Russian operatives to steal usernames and passwords and eventually infiltrate the entire network by exploiting security holes in Microsoft Exchange.

He notes it wasn't the first time Russian hackers are believed to have used such tactics.

"They did the same thing in Ukraine," Patterson said, referring to a series of cyber attacks that wreaked havoc on that country's energy grid. "In fact, the Russians probably used Ukraine as a test bed for cyber attacks targeted at the U.S."


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