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The city council of Riviera Beach has agreed to pay $600,000 in Bitcoin(BTC)trade to hackers, as reported by the New York Times. The city council caved after being denied access to the data that was encrypted in a ransomware attack and agreed to pay the ransom. The hackers asked to be paid in Bitcoin, which makes it very difficult to track down the money because of the anonymity that Bitcoin transactions provide.
On May 29th, an employee of the police department opened an infected email, which resulted in a breakdown of the online systems; the city termed it “a security event” at the time. The hackers stole encrypted government records, and city officials were denied access to critical data, leaving the city without the ability to accept utility payments other than in person or by regular mail.
According to Rose Anne Brown, a city spokesperson, the city had to spend over $900,000 on new computer software that had been planned for next year. Shortly after the “security event,” city officials unanimously agreed to pay nearly 65 BTC (~$592,000) as ransom to regain access to the encrypted data. However, the amount was paid in a leap of faith from government officials and there was no guarantee that the hackers can and will hold up their end of the deal.
Michael van Zwieten, director of technology services at the Florida League of Cities, said:
“All cities, whether large or small, are by nature very cost-conscious when it comes to budgeting for technology investments. The mid- to small-sized cities are especially strained when it comes to finding the necessary resources to keep their technology current. There are only a finite amount of dollars that can be divvied up within the city to fund the services its citizens are expecting.”
Crypto Anonymity: Good or Bad?
Most, if not all, cryptocurrency exchanges have long been requiring identification and other documents from those looking to use their platform to trade cryptocurrencies, a function known as “know your customer” (KYC). However, cryptocurrencies by design enable anyone to trade and transfer funds on their own without the need for an intermediary or even a crypto exchange. This means even if you are not linked to a cryptocurrency exchange, you can still trade digital assets such as Bitcoin, Ethereum and other cryptocurrencies.
This anonymity and freedom to move virtual assets without the risk of accountability is what governments and financial watchdogs hate about cryptocurrencies. Countries like China, India, Japan, Russia, the U.S., Thailand and many more are trying to put a leash on cryptocurrencies through legislation.
However, the only effective way that they’ve found so far is to outright ban cryptocurrencies, which riles up cryptocurrency supporters, who argue that putting a ban on the technology is not going to solve anything. Instead, they hope for a more inclusive approach from regulators which does not halt the path of innovation but still brings in accountability and transparency for the industry.