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Ex-SEC Enforcer: Cryptocurrencies ‘Essence Of Ransomware’

Investors in digital currency are helping online hackers get away with their crimes, the Securities and Exchange Commission (SEC) internet enforcement office founder said Thursday (June 3).

“Ransomware is hitting everywhere, and they’re all collecting it in bitcoin because there’s no way they’re going to get caught,” John Reed Stark said in an interview with CNBC’s “Squawk on the Street.” “So, you’re also enabling it.”

Stark, who now heads his own consulting firm, told CNBC cryptocurrencies essentially have no practical use, comparing them to the circulation that fueled huge runs on meme stocks like GameStop and AMC earlier this year. He added that there’s also no registration or other requirements tied to crypto to provide transparency.

“At least with GameStop and AMC you’re not necessarily hurting anyone,” he said. “… But with crypto, you are really hurting a lot of people, and that sort of risk I don’t think is a good one for society.”

He called crypto the “essence of ransomware,” a phrase that’s become popular of late thanks to a series of cyberattacks, like the one on JBS USA, the world’s largest meat packer.

In May, the massive Colonial Pipeline was shut down for nearly a week by hackers believed to be tied to Russia. Colonial paid nearly $5 million to get the hacking group — known as DarkSide — to restore service. DarkSide collected $90 million in crypto payments before ending its operation. Last year, roughly $406 million in crypto payments were made to cyberattackers.

“The country is kind of falling apart from ransomware all because of crypto, and the main reason people own crypto is because they think someone else will buy it and make the price higher,” said Stark. “There’s no other reason to invest in it.”

Stark isn’t the only voice issuing a warning on the connection between cryptocurrencies and cybercriminals. As PYMNTS reported Thursday, voices ranging from cybersecurity executives to the White House are taking this threat seriously.

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