Australian Government Tracks All Bitcoin to AUD Conversions

The Australian government is keeping a close eye on bitcoin, but not on the regulatory front. Rather, it is tracking every conversion from bitcoin intoAustralian dollars, and vice-versa.

The government agency doing the snooping is the Australian Transaction Reports and Analysis Centre (Austrac). The centre is tasked with countering money laundering and terrorist finance, so it is only logical that it would track anonymous transactions.

Tracking bitcoin-related transactions

Austrac CEO John Schmidt told lawmakers that Australia collects data on all international fund transfers, including bitcoin conversions, ZDnet reports.

“At some point, a person will be purchasing bitcoin using Australian dollars, for example, and then if they are dealing in substances or services, will want to convert those bitcoins back into the legitimate currencies of where ever they are, so they can gain the benefit of them.”

This is where it gets interesting. Because the centre gets international transfer instructions, it is possible to identify transactions made by people purchasing bitcoins.

Schmidt added that most countries have the same capability as Australia, but it is unclear whether they use it. He added that some prosecutions have already resulted from intelligence collected by the centre.

The CEO argued that bitcoin is a commodity used to transfer value rather than a legitimate currency. When bitcoins are converted into AUD, Austrac can identify those transactions.

Bitcoin is not a threat, yet

Schmidt also issued a warning that if bitcoin gains more independence from fiat currency it will become more attractive to criminal organizations that need to channel money around. In that case, international cooperation will be necessary, as Schmidt points out:

“Because they will operate on servers in jurisdictions around the world, and use very sophisticated methods to move and hide their identities. It’s when you have the international cooperation [...] that is the answer to being able to stop that criminal behaviour.”

Interestingly, Schmidt pointed out that Austrac is still not able to quantify the size of the bitcoin market in Australia, but he doesn’t see it as a major threat. He pointed out that people are gambling on the prospective value of bitcoin rather than using it for transactions.

“At this point in time, when you consider all the existing threats we face from the criminal perspective, they are not top of the list,” Schmidt concluded.

Australian 100 Dollar Bill image via Shutterstock

Post Source: http://www.coindesk.com/australian-government-tracks-all-bitcoin-aud-conversions/

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Bitcoins, other digital currencies stolen in massive 'Pony' botnet attack

Cybercriminals have infected the computers of digital currency holders, using a virus known as “Pony” to make off with account credentials, bitcoins and other digital currencies in one of the largest attacks on the technology, security services firm Trustwave said.

The attack was carried out using the “Pony” botnet, a group of infected computers that take orders from a central command-and-control server to steal private data. A small group of cybercriminals were likely behind the attack, Trustwave said.

Over 700,000 credentials, including website, email and FTP account log-ins, were stolen in the breach. The computers belonging to between 100,000 and 200,000 people were infected with the malware, Trustwave said.

The Pony botnet has been identified as the source of some other recent attacks, including the theft of some 2 million log-ins for sites like Facebook, Google and Twitter. But the latest exploit is unique due to its size and because it also targeted virtual wallets storing bitcoins and other digital currencies like Litecoins and Primecoins.

Eighty-five wallets storing the equivalent of $220,000, as of Monday, were broken into, Trustwave said. That figure is low because of the small number of people using Bitcoin now, the company said, though instances of Pony attacks against Bitcoin are likely to increase as adoption of the technology grows. The attackers behind the Pony botnet were active between last September and mid-January.

“As more people use digital currencies over time, and use digital wallets to store them, it’s likely we’ll see more attacks to capture the wallets,” said Ziv Mador, director of security research at Chicago-based Trustwave.

Most of the wallets that were broken into were unencrypted, he said.

“The motivation for stealing wallets is obviously high—they contain money,” Trustwavesaid in a blog post describing the attack. Stealing bitcoins might be appealing to criminals because exchanging them for another currency is easier than stealing money from a bank, Trustwave said.

There have been numerous cyberattacks directed at Bitcoin over the last year or so as its popularity grew. Last year, a piece of malware circulating over Skype was identified as running a Bitcoin mining application. Bitcoin mining is a process by which computers monitor the Bitcoin network to validate transactions.

“Like with many new technologies, malware can be an issue,” said a spokesman for the Bitcoin Foundation, a trade group that promotes the use of Bitcoin, via email. Wallet security should improve, the spokesman said, as more security features are introduced, like multisignature transactions, he said.

Digital currency users can go to this Trustwave site to see if their wallets and credentials have been stolen.

Post Source: http://www.pcworld.com/article/2101260/bitcoins-other-digital-currencies-stolen-in-massive-pony-botnet-attack.html

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Wisconsin man loses $150,000 in international bitcoin scam

By Christena T. O'Brien

The Leader-Telegram

An Eau Claire man has reported losing more than $150,000 in an international Internet scam using a different kind of money.

Jamie Russell, a 34-year-old software engineer who lives in Eau Claire, first invested in bitcoin -- digital currency exchanged through a peer-to-peer network -- in August 2012. He purchased hundreds of bitcoins in their infancy for $5 per coin. Since then the currency has increased in value to more than $800 apiece.

Concerned about the security of his digital bitcoins, Russell agreed to digitally submit 201.7 bitcoins to a man in the United Kingdom for 190 physical bitcoins, or tokens with a bitcoin digital key hidden behind a tamper-proof strip. (Russell actually has some of the physical currency, which he keeps in a safe place outside his home.)

Between Dec. 9 and 11, Russell transmitted digital bitcoins worth $151,275 to the digital wallet of a man who identified himself as David Williamson, according to an Eau Claire police report. The men met through the website bitcointalk.org and had been in contact for more than a year, and Russell came to trust Williamson.

Williamson provided Russell with two shipping tracking numbers and indicated the physical coins were en route to his home in Eau Claire. But they never arrived, prompting Russell to contact Williamson, who provided excuses and eventually cut off all communication.

Russell, who had completed a number of bitcoin transactions -- but none with Williamson -- prior to this with no problems, posted the information online on bitcointalk.org and subsequently learned that as many as a dozen other users also had been defrauded by Williamson.

"I guess criminals flock to places that are fairly new," said Russell, noting Williamson had attempted to get him to exchange even more of his digital bitcoins for the physical tokens. "It's very unfortunate."

Russell reported the fraud to UK officials, who told him he also needed to file a complaint with local police. He then reported the scam to an Eau Claire police officer on Dec. 29.

"It was pretty devastating to have this happen," said Russell, who remains a proponent of the bitcoin. "It still makes me sick to say the amount of money that was lost."

Even with the theft, Russell, who got into bitcoins as a high-risk, speculative investment, said he's still money ahead of where he was before he invested in the virtual money.

Still, he's not taking the loss lightly.

"My mistake was paying money (in the form of the digital bitcoins) first, which exposed me to more risk," he said.

Before sending money in any form to someone or some business overseas, Eau Claire police Lt. Derek Thomas advises people to research the intended recipient.

"These people overseas try to develop a rapport with people in the U.S., ... and once they get the money, they run," Thomas said. And "when a crime occurs overseas, it's very difficult for us to follow up."

Russell, who reads bitcoin articles daily, makes no apologies for his actions.

"Everything I've done in the bitcoin realm has been with my eyes wide-open," he said.

Even though Williamson lives in another country, Russell remains "expectant that he is going to be prosecuted," he said. However, "I'm not expectant that I'm going to get any money out of him."

Post Source: http://www.twincities.com/localnews/ci_25057486/wisconsin-man-loses-150-000-international-bitcoin-scam

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Hotels Now Accept Bitcoins

200,000 Hotels Now Accept Bitcoin Through Online Travel Agency CheapAir

California-based travel agency CheapAir.com has announced that it is expanding its service to allow bitcoin users to book hotel stays with the cryptocurrency.

CheapAir has been accepting bitcoin for flight bookings since Novemberwhen it partnered with Coinbase, however until today, users have not been able to pay in bitcoin for its extensive hotel inventory.

Speaking to CoinDesk, CEO and founder Jeff Klee voiced his enthusiasm for becoming the “first company in the US” to allow bitcoin users to book hotel stays with the virtual currency:

“Bitcoin gets a bad rap in mainstream media. What I found is that the people who use bitcoin are great, they’re passionate and they’re looking to solve a lot of the problems inherent in the economic system and the world.”

The news garnered a largely positive reaction on reddit and the BitcoinTalk forum, with ambitious bitcoin users even suggesting they would pass the news along to other travel companies that have expressed a cautious interest in bitcoin.

Better-than-expected return

“For it to become a really big part of our business, bitcoin itself needs to grow. We think it will.”

Klee indicates that the decision to expand its program to include hotels was due to a “better than anticipated” response from the community after it began accepting bitcoin payment for flights.

“We had no idea what to expect, however, it generated a nice enthusiasm,” Klee recounts.

Klee did not share specific numbers, but did say that bitcoin customers are more likely to become loyal than traditional customers, and that his company receives “a nice volume of emails from bitcoin customers”. Still, despite these benefits, he won’t call bitcoin a game-changer for CheapAir just yet, though he thinks CheapAir’s position could change as the currency gains more loyal users.

How CheapAir pays hotels

For CheapAir, paying hotels and flight providers is still a challenge, but one they find worthwhile given the currency’s dedicated customers and engaged base. Klee noted that in order to process transactions, CheapAir must accept the bitcoin and exchange it for fiat currency before paying hotels. This means certain hotels, those that require patrons to pay at checkout, will still be off limits to bitcoin customers.

Klee notes that “once in a while you’ll see a hotel on our site that won’t have a bitcoin logo by it”, but that the majority of properties on the site will see the bitcoin logo clearly displayed on its listings.

Source: http://www.coindesk.com/200000-hotels-accept-bitcoin-cheapair/

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