Crime

Tracking the rise in crypto-ransoms as Norwegian kidnappers demand payment in Monero

Kidnapping for ransom is an age-old criminal financing tool. But while such demands have traditionally been made in fiat currencies, in recent years, criminals have also been seeking their ransoms in crypto. The relative anonymity of cryptocurrencies makes it much harder for authorities to track down the perpetrators. Law enforcement can identify users’ wallets, but it is much more difficult than sourcing named bank accounts.

The latest high-profile case to be reported has taken place in Norway, with the kidnapping of Anne-Elisabeth Falkevik Hagen, the 68-year-old wife of a Norwegian billionaire. Her abductors have demanded $10.3 million in Monero tokens, local police confirmed Wednesday. The kidnapping occured in October but no reports had been made publicly until this week for security reasons. As of this writing, she remains missing.

Monero is a currency best known for its promise of privacy as it prevents users’ transactions from being traced, unlike bitcoin. But considering the ransom demand amounts to nearly 10% of Monero’s total market cap, it would be difficult to conceal such a large transaction even in an anonymous cryptocurrency.

The rise of crypto-ransoms

The first mass report of a crypto-ransom appeared in January 2015 when kidnappers in Costa Rica demanded $500,000 worth of Bitcoin in exchange for the safe return of Canadian-national Ryan Piercy. A similar attack took place in Hong Kong several later. Attackers released the two victims after they received partial ransoms in crypto.

As the price of bitcoin reached its peak, Pavel Lerner, manager of Bitcoin exchange Exmo, was kidnapped by a criminal group in Kiev, Ukraine on December 27th 2017. The Russian national was freed three days later in exchange for over $1 million in bitcoin, although it is unclear whether his family or employees paid it.

Crypto-kidnappers have also targeted children. In May 2018, a 13-year-old boy was abducted while playing in Mpumalanga, South Africa. His attackers left a note demanding 15 bitcoin, according to the Guardian. This is thought to have been the first crypto-ransom in the country’s history. Since then, however, another local gang has demanded 5 BTC for the return of a 9-year-old girl. Police have since released the bitcoin address given by the attackers. Other high-profile attacks include 65-year-old Cape Town business tycoon Liyaqat Parker, who was seized from his car in September 2018. His attackers allegedly demanded 50 Bitcoins in ransom, and he was released two months later. Whether the ransom was paid remains unknown as his family has declined to comment, CCN writes.

Perhaps not surprisingly, London-based Control Risks, a consultancy specializing in political, security and integrity risk, has recorded a year-on-year increase in the number of reported crypto-related kidnaps.

In 2017, we recorded an average of two cryptocurrency related cases every quarter; however, in the first half of 2018 this average rose slightly, to a case per month,” they wrote in a blog post. They also reported that at least 12 countries have suffered from crypto-ransom kidnaps, including the US, India, and Brazil.

Despite its recent proliferation, Control Risks said that crypto-ransom is likely to remain a limited trend for now, as kidnappers need “technical sophistication and are unlikely to move with any haste towards demanding crypto-ransom.” Indeed, according to Control Risks, “several high-profile cases involving crypto-ransoms have ended in the prosecution of the perpetrators.” 

 

Image credit: Shutterstock/Marija Stojkovic