Malware vendors accept Bitcoin but mules and fake IDs keep it at bay

Malware vendors are warming to bitcoin, but the virtual currency has an unlikely rival in some geographies in the form of fake identity documents and money mules.

Bitcoin’s potential to offer anonymity, or at least pseudo-anonymity, has earned it a place in online drug markets like Silk Road, but until recently the virtual currency’s connection to malware has been limited to bitcoin theft, botnet bitcoin mining or price manipulation through cyber attacks on bitcoin exchanges.

Now bitcoin is gaining ground for payments in the cybercrime-as-a-service market, where vendors sell keyloggers, remote access trojans and other tools of the trade, according to Dancho Danchev, a researcher at security firm Webroot.

But bitcoin is likely to spread unevenly in different geographies, according to Danchev, who expects vendors on the “international market” (for English buyers) to adopt bitcoin, while Russian and Eastern European vendors will largely ignore it.

The payment and transfer services WebMoney and Liberty Reserve are already well-established instruments among Russian and Eastern European cybercriminals who have “practiced to perfection” their use over the years, he notes.

Meanwhile, it's currently not possible to pay anyone in Russia with PayPal, which should make Bitcoin more appealing, yet it is not widely used.

European malware researcher, Kafiene, who tracks exploit kits and malware often on Russian-language forums, confirmed that Bitcoin remains rare. A search by the researcher turned up just one Russian-language vendor (selling Netwire remote control software) who began to accept Bitcoin in December last year alongside Liberty Reserve.

“[Accepting bitcoin] indeed does not seem to happen that often,” Kafiene told CSO.com.au. In international malware markets on the other hand, Bitcoin payments are emerging alongside increasing use of PayPal, Danchev notes.

Danchev points to another vendor who sells a keylogger to English-speaking buyers for $35 with options to pay including Liberty Reserve, MoneyPak, PayPal and most recently, Bitcoin.

But the vendor in question was likely not using Bitcoin to improve his anonymity, and based on his methods of avoiding antivirus Danchev considered him careless about how information he exposes can be used against him -- at least compared with his Russian counterparts.

“The use of Bitcoin in this particular case appears to be more of a way to for him to diversify the ways through which he’s accepting payments, rather than a practice aimed at improving his OPSEC (Operational Security) or anonymity,” notes Danchev.

The vendor’s counterparts in Russia and Eastern Europe however are more “OPSEC aware” yet bitcoin, despite its promised anonymity, remains a rarity there.

Bitcoin will probably remain rare there, according to Danchev, because malware vendors in these markets already have payment solutions that first work and second provide anonymity, thanks to “easily obtainable fake IDs/passports, the overall availability of money mules participating in the cybercrime ecosystem, and cybercrime-friendly virtual currency processing providers.”

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