Bitcoin Wallet Addresses Sanctioned by US Treasury for First Time

Hacks and Cybersecurity, News

The US Treasury’s Office of Foreign Assets Control (OFAC) has officially sanctioned two bitcoin wallet addresses for the first time, warning that repercussions could ensue for those associated with the accounts. The addresses have been published online as have the names of the Iranian individuals, Ali Khorashadizadeh and Mohammad Ghorbaniyan. With current prices, the two bitcoin wallet addresses have processed nearly USD 25 Million worth of BTC.

The SamSam sanction

The bitcoin wallet addresses are associated with the infamous SamSam ransomware. SamSam is a Trojan horse discovered in March 2016. It has been causing widespread devastation for nearly three years, hitting Atlanta, San Diego, Georgia, New Jersey, and numerous schools, hospitals, and municipalities. OFAC estimates the SamSam collected over USD 6 Million in ransom payments. The way it works is straightforward but effective. It attacks and encrypts machines (typically government institutions and offices), forcing the owners to send funds in BTC to the bitcoin wallet addresses. The funds were sold and converted to Iranian Rial.

According to the department, over 7,000 transactions have been associated with those two accounts, nearly all SamSam related. While it was not revealed how many of the victims paid up, news reports indicate that many did, such as a hospital in Indiana which paid USD 55,000 to unlock its computers. The department has advised institutions to refuse to pay, but in the case of hospitals who need access to medical records, this can be difficult to do. SamSam also has infected systems in the UK and Canada.

Bitcoin wallet addresses sanctioning – warnings for BTC users

For the first time, bitcoin wallet addresses have been added to the sanctions list for the US Treasury, in much the same way a country or bank account can be sanctioned. More and more, the crypto-asset is being interwoven into the existing infrastructure, with custody solutions, crypto derivatives, case law, regulation, and now sanctions. It is also quite easy to link identities on the blockchain using IP addresses, the bitcoin blockchain being anonymous but not private. These cases are ideal for Federal institutions to make an example of. BTC can be linked to terrorism and criminality, providing a justification for the arbitrary invasion of private wallet addresses.

There is also a larger political picture to take into account. The US pulled out of the Iranian nuclear trade deal, much to the chagrin of Europe, and Iran has been kicked out of SWIFT, the protocol used for international finance. Iran effectively has no chance for finance and will need to use BTC and other cryptocurrencies to survive. According to Treasury Under Secretary for Terrorism and Financial Intelligence Sigal Mandelker

“Treasury is targeting digital currency exchangers who have enabled Iranian cyber actors to profit from extorting digital ransom payments from their victims. As Iran becomes increasingly isolated and desperate for access to U.S. dollars, it is vital that virtual currency exchanges, peer-to-peer exchangers, and other providers of digital currency services harden their networks against these illicit schemes,”

Digital Nomad with an interest in Zen and Blockchain technology.

Law graduate with 3 years experience as a consultant in the capital markets industry and 4 years experience freelancing on UpWork as a Creative Writer.