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China Says OPM Breach Was Not State-Sponsored but a Criminal Act

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ChinaThrough its official news agency Xinhua, China has stated that an investigation covering the substantial breach that compromised over 22 million federal employees was a cyberattack borne out of criminal intent. The news agency added the breach was not state-sponsored, contrary to the widely asserted opinion that the Chinese government was involved.

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In a news report, state-run news agency Xinhua covered the meeting between U.S. and Chinese officials in the first ever bilateral ministerial dialogue exclusively focusing on cybersecurity. The publication contends the two countries “worked hard to remove one of the major stumbling blocks to the development of bilateral ties,” with the dialogue about cybercrimes and cybersecurity.

The report stated:

Among the cases discussed included the one related to the alleged theft of data of the U.S. Office of Personnel Management by Chinese hackers.

Through investigation, the case turned out to be a criminal case rather than a state-sponsored cyber attack as the U.S. side had previously suspected.

The talks were held between U.S. Attorney General Loretta Lynch, Department of Homeland Security Secretary Jeh Johnson and Chinese State Councilor and Minister of Public Security Guo Shengkun.

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In what is widely seen as one of the biggest governmental breaches of all time, the Office of Personnel Management (OPM) hack had hackers make away with over 20 million social security numbers, 19.7 million records that included health, financial and personal information. Five million stolen records also included fingerprints of federal employees.

Also read: 21 Million More US Personnel Exposed in Second Attack

The joint session was the first in a directive agreed by Presidents Obama and Xi Jinping during a stateside visit by the Chinese President in September this year. Tensions between the two countries remained high prior to the visit with cybersecurity a chief subject of debate between the two.

While there were rumors of the United States putting forth sanctions against China, the former held back, with a U.S. official citing the decision not to impose sanctions was for better diplomacy.

Cybersecurity investigators are likely to be skeptical to China’s claims about not being involved, reports the New York Times. It cites a claim by NSA director Adm. Michael S. Rogers who told Congress in September that there was no evidence found of any breached social security numbers used for fraud or other nefarious purposes. Cybercriminals looking to profit routinely sell the stolen information, unlike a state that has interests other than monetary profit.

The question remains, however. If state-sponsored hackers weren’t behind the OPM breach, who was?

Fingers are frequently pointed at hackers unrelated to the People’s Liberation Army. More specifically, hackers who are under contract at technology companies and universities. It’s a theory, with the unclear intent of why a private hacker would breach government websites of another country.

The U.S. Director of National Intelligence, James R. Clapper Jr testified before the Senate Armed Services Committee to speak about the OPM breach. “Egregious as it was,” the OPM breach was not a cyberattack, Clapper said.

“Rather, it would be a form of theft or espionage. We, too, practice cyberespionage and…we’re not bad at it,” he added.

The United States and China, along with a raft of the most powerful nations in the world recently signed a pact that sets the ground rules for global cyber-espionage. Summed up, there is no room for commercial hacking that involves breaches of private companies and their trade secrets or business information.

Images from Shutterstock.

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  1. Tom Kelting

    December 4, 2015 at 1:37 pm

    Chinese Official spokespersons can *say* anything — and regularly do so.My reaction, until I see corroborative evidence to the contrary, is that they’re finally learning to play the game.
    The petulant, acrimonious rhetoric used by, for example, the Chinese navy (“go away, we don’t need you here”) gets them nowhere, and makes them appear like characters from ‘The Simpsons’ (“you GO now!”, barked by the aisian neighbors.)
    Better to “BS” and buy some time, like Iran used to do.
    Also, this tac doesn’t make them sound like such social Yahoos on the world stage.

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Breaches

Ethereum Notches Two-Month High as Bitcoin Offspring Triggers Volatility

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Digital currency Ethereum climbed to a two-month high on Monday, taking some of the heat off Bitcoin and Bitcoin Cash, which have slumped since the weekend.

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Ethereum Forges Higher Path

Concerns over Bitcoin created a favourable tailwind for Ethereum (ETH/USD), which is the world’s No. 2 digital currency by total assets. Ether’s price topped $340.00 on Monday and later settled at $323.54. That was the highest since June 20.

At its peak, ether was up 10% on the day and 70% for the month of August.

The ETH/USD was last down 2.2% at $315.02, according to Bitfinex. Prices are due for a brisk recovery, based on the daily momentum indicators.

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Fractured Bitcoin Community

Bitcoin and its offshoot, Bitcoin Cash, retreated on Monday following a volatile weekend. The BTC/USD slumped at the start of the week and was down more than 3% on Tuesday, with prices falling below $3,900.00. Just last week, Bitcoin was trading at new records near $4,500.00.

Bitcoin Cash, which emerged after the Aug. 1 hard fork, climbed to new records on Saturday, but has been in free-fall ever since. The BTH was down another 20% on Tuesday to $594.49, according to CoinMarketCap. Its total market value has dropped by several billion over the past two days.

Analysts say that a “fractured” Bitcoin community has made Ethereum a more attractive bet this week. The ether token has shown remarkable poise over the past seven days, despite trading well shy of a new record.

Other drivers behind Ethereum’s advance are steady demand from South Korean investors and growing confidence in a smooth upgrade for the the ETH network. The upgrade, which has been dubbed “Metropolis,” is expected in the next several weeks. Its key benefits include tighter transaction privacy and greater efficiency.

Ethereum Prices Unaffected by ICO Heist

Fin-tech developer Enigma was on the receiving end of a cyber-heist on Monday after hackers took over the company’s website, mailing list and instant messaging platforms. The hack occurred three weeks before Enigma’s planned Initial Coin Offering (ICO) for September 11.

In addition to defacing the company’s website, the hackers pushed a special “pre-sale” ahead of the ICO. While many users realized it was a scam, 1,492 ether tokens – valued at $495,000 – were directed into the hackers’ cryptocurrency wallet by unsuspecting backers.

The irony in all this is that Engima is a cryptography company that prides itself on top-notch security protocols. The company issued a statement that its servers had not been compromised.

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Breaches

Ethereum Prices on Track for 35% Monthly Drop

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It has been a difficult month for ethereum. The world’s No. 2 digital currency has lost a third of its value over the past 30 days following a series of cyber breaches targeting vulnerable wallets and ICOs.

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Ethereum Struggles to Regain Momentum

Ethereum (ETH/USD) was trading near $197.00 Sunday at 6:30 BST, according to Bitfinex. That represents a decline of around 5%. At current values, ethereum’s market cap was $18.4 billion.

The ETH/USD exchange rate has struggled throughout July, with prices briefly falling below $160.00. The decline, which amounted to a 60-day low, lured bargain-hunters back into the market. After surging back toward $250.00, the ETH/USD has consolidated below the $220-mark, which continues to offer strong resistance. On the opposite side of the spectrum, major support is located at $180.00.

A price recovery may prove elusive in the short-term, with the Relative Strength Index (RSI) and Stochastic indicator signalling weak underlying momentum.

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Despite its recent decline, ethereum’s value has surged more than 2,200% this year.

Cyber Attacks, SEC Weigh on Market

The ethereum network suffered a large-scale cyber breach earlier this month resulting in the loss of tens of millions of dollars. A community of ethical hackers quickly banded together to “rescue” hundreds of millions of dollars worth of tokens.

Blockchain-based trading platform Coindash was also hijacked during an initial coin offering (ICO). The breach exposed Coindash’s ether wallet address, resulting in the loss of $7 million worth of ether.

The Securities and Exchange Commission (SEC) has also taken an interest in the ethereum-based ICO market. Last week, the regulator concluded that a certain multi-million dollar token sale last year violated securities law. Although ICOs have been compared to crowd-sourcing, the SEC maintained that some tokens were in fact securities.

Analysts say the SEC ruling could impact the future of ICOs, although it remains unclear how the regulator is pursuing this market. The SEC’s July 25 press release cautions investors about ICOs in general.

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Coders Safeguard Vulnerable Ethereum Wallets Following Security Breach

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Ethereum suffered large-scale security breaches last week after anonymous hackers targeted vulnerable wallets in the network, resulting in the loss of tens of millions of dollars. However, it didn’t take long for a volunteer group of coders to “rescue” the funds in 500 at-risk wallets before the same attackers could get to them too.

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White Hat Group Takes Charge

The so-called White Hat Group showed initiative by “rescuing” the funds using the same techniques the thieves employed to compromise $32 million USD worth of ether from three multi-signature wallets. As of Monday, the White Hat Group of ethical hackers was in possession of $86 million worth of ether and an additional $122 million in tokens.

Tokens are digital assets that are sold during an Initial Coin Offering (ICO) fundraising event. They have proven to be extremely popular.

Tens of millions of dollars worth of ether and tokens have already been returned to their owners. The White Hat Group says it will issue full refunds by the end of July.

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Blockchain-based trading platform Coindash was also breached last week, resulting in the loss of more than $7 million worth of ether.

Security Breaches Nothing New in Crypto World

For all its benefits, cryptocurrency has been vulnerable to several high-profile security breaches. Last summer, Hong Kong-based Bitfinex was the target of a major attack that resulted in the theft of around $70 million worth of bitcoins. In response, the exchange announced a controversial plans to “socialize” its losses among all users. Each Bitfinex trader was docked 36% as a result.

Bitcoin prices declined sharply following the attack, stopping what had been a blistering summer of gains.

Ethereum Enterprise Alliance

For anyone doubting the potential of the ether, take a look at the list of companies participating in the Enterprise Ethereum Alliance (EEA). The EEA is a forum that connects Fortune 500 companies, startups and academics with ethereum subject matter experts.  The EEA is made up of multinational banks and some of the world’s biggest technology companies.

The forum has made cyber security a top priority, according to a May 22 press release. In the release, companies like Infosys, Mitsubishi UFJ Financial Group, Synechron and others expressed their intent to contribute to the future of ethereum’s security.

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