Blackbeard may not be the first name that comes to mind when considering cybercrime, but prior international efforts to stop stateless rogue actors can point us toward the proper focus for cybersecurity—governments taking responsibility to solve a classic collective action problem by direct action, supporting existing industry defense measures, and leading multilateral cooperation efforts. This
The United Kingdom and the United States joined forces last week in an initiative to combat ransomware attacks by sanctioning seven Russian nationals believed to be members of a hacking network. Together with U.S. authorities, the UK’s Foreign Office has reportedly identified the individuals in question, frozen their assets and imposed travel bans in respect of them.
Ransomware is a type of malware that typically renders systems or data inaccessible, often due to the encryption of files. Devices are often locked, and data may be leaked, in addition to being encrypted or deleted, unless and until the victim pays a “ransom” to the actors who deployed the ransomware in return for decryption.
Anxiety is running high as a result of Russia’s invasion of Ukraine, particularly in cybersecurity circles. The 2017 NotPetya attack was a Russian cyber-weapon fired at the Ukraine. In 2017, NotPetya spread to FedEx, Maersk, Merck, and several other companies, and it would be naïve not to expect a spillover from the 2022 attack. Indeed, a barrage of similar “wipers” has already been fired in 2022, and reports are circulating that some computers in Lithuania have been impacted.
Many cyber-weapons are delivered through phishing attacks, and companies can take three important steps to help prevent these attacks:
Continue Reading The Ukrainian Cybersecurity Spillover Problem
In a recent article in Global Data Review, Ed McNicholas provided insights on a proposal by the Arizona legislature to ban tax-payer funded ransomware payments. The bill, recently introduced in the Arizona House of Representatives, would restrict public entities from paying ransoms demanded by hackers. A companion bill would require that cyber attacks be
As ransomware attacks continue to proliferate, organizations are facing increasingly complex practical and legal considerations. Ransomware threats can range from simple Ransomware-as-a-Service models to sophisticated attacks with network-wide impacts. In many cases, ransomware attacks involve not only encryption but also data exfiltration with accompanying regulatory and contractual notification obligations. Ransomware attacks are now so pervasive that they were deemed “a direct threat to our economy” by a Treasury Department Press Release. The resulting governmental focus on ransomware will create new and evolving regulatory challenges for organizations experiencing an attack.
Ransomware in 2021
If 2020 initiated a new era of ransomware threat due to pandemic-related shifts to remote work and the associated security risks, 2021 proved that this threat is only likely to increase in 2022, as the toxic mix of host nations accommodating ransomware gangs, the widespread ability of businesses to pay ransomware under insurance policies, the decreasing technical barriers to entry for attackers, and the ready availability of often untraceable cryptocurrency all remain strong. High-profile ransomware attacks in 2021 included the Colonial Pipeline attack, which interrupted gas supplies along the East Coast of the United States and the attack on JBS Food, one of the world’s largest meat producers, which caused panic buying by some consumers. As with other cybersecurity threats, supply chains were also exploited, with the REvil ransomware gang leveraging unauthorized access to Kaseya’s IT administrator software infrastructure to push out a fake software update containing ransomware. In that instance, the FBI was able to provide some assistance by obtaining encryption keys, but victims of future attacks may not be so fortunate.
Continue Reading Ransomware Threat Continues to Explode with New Legal and Regulatory Risks
Attorneys for Blackbaud and the putative class action plaintiffs allegedly impacted by the publicly-traded software company’s data breach last year were scheduled to meet last month to discuss a possible resolution of the remaining claims in the multi-district litigation. But the only filings in the case since then concern a contemplated amended complaint, suggesting the MDL is entering a new phase rather than nearing a conclusion.
The planned mediation and order regarding the expected new pleading came several days after Blackbaud announced, along with strong third-quarter financial results, that it has nearly exhausted its $50 million in relevant insurance coverage.
“Based on our review of expenses incurred to date, and upon consideration of the number of matters outstanding,” the company reported, referring to hundreds of customer requests for reimbursement in addition to the putative consumer class actions in the U.S. and Canada, “we believe that total costs related to the Security Incident will exceed the limits of our insurance coverage during the fourth quarter of 2021.” The company, whose fundraising and constituent-relationship software is widely used by nonprofits, noted that breach-related costs would “negatively impact our [Generally Accepted Accounting Principles] profitability and cash flow for the foreseeable future.”
On October 1, the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) published an advisory to alert companies on potential sanctions risks related to ransomware payments (the “Advisory”).[1] While ransomware attacks, by design, create business critical problems requiring swift attention and remediation, the Advisory cautions that victims of ransomware attacks, and ransomware-related services providers, must balance such considerations against the risk of sanctions liability.
Continue Reading Between a Rock and a Hard Place: OFAC Issues Advisory on Ransomware Payments
The SEC’s Office of Compliance Inspections and Examinations (OCIE) released a Risk Alert related to Ransomware on July 10, 2020. In the publication, Cybersecurity: Ransomware Alert, OCIE alerts companies to the increase in sophisticated campaigns orchestrated to invade financial institution networks in order to obtain confidential information and plant ransomware. The attacks generally involve perpetrators using “phishing and other campaigns designed to penetrate financial institution networks … to access internal resources and deploy ransomware.” Once the ransomware is deployed, institutions typically lose control of the ability to use and maintain the integrity of their systems and data until they pay a ransom to the attackers.
Continue Reading OCIE’s Guidance on Ransomware Attacks