TL;DR: What might have begun as an attack vector anomaly has turned into a full-fledged global trend now concentrating in the United States. Hacking into municipal government services and holding them ransom is gaining real traction, real profits. The latest US local city to fall in line is Lake City, Florida, which just recently agreed to pay nearly half a million dollars in bitcoin to have communication system access restored.

Florida City Pays Hacker $485,000 in Bitcoin

Cryptocurrency news outlets can be at times loathed to publish crime stories involving bitcoin when the matter’s crux isn’t really bitcoin-related. That’s true at CoinSpice, as we’re sensitive to mainstream tropes about cryptocurrency equaling criminals. However, there appears to be an unflattering use case developing: government services ransom. Regular readers followed the Baltimore, Maryland saga, whereby a new mayor and his city council outright refused a relatively modest ransom … only to spend $18 million in response and recovery.

That cost-to-benefit lesson might’ve been taken to heart by Riviera Beach, a Florida resort town that “agreed to let its insurance carrier pay a 65 bitcoin core (BTC) ransom, more than half a million dollars, in order to recover stolen data from hackers and hopefully get its beleaguered computer system back online,” we reported last week.

Now, it’s Lake City, Florida’s turn to flinch, and it has agreed to pay 42 BTC in ransom to hackers in order to be let back into their own communication systems. City manager Joe Helfenberger said in a statement, “Based on the advice of the vendors the purchase provided a mechanism to the City to retrieve the City’s files and data, which had been encrypted, and hopefully return the City’s IT system to being fully operational. If this process works it would save the City substantially in both time and money.” According to local media, “The city’s insurance began negotiating with the attacker, resulting in an agreement to pay 42 bitcoins–roughly $480,000.”

Evidently, a malware attack took down city communications earlier this month. City workers and even a private tech firm attempted to recover the systems, and had some limited success, but ultimately determined it was a lost cause. “Last week, the city says they received a ransom request from the attacker,” local media explain further. “The ransom was submitted to the City of Lake City’s insurance provider Florida League of Cities. After weighing the positives and negatives, the city’s insurance began negotiating with the attacker, resulting in an agreement” and a payout on 25 June 2019. In the end, taxpayers were on the hook for a $10,000 deductible, which nearly all experts believe is a lot cheaper than available alternatives. The city hasn’t announced when communication services will be back online.

DISCLOSURE: The author holds cryptocurrency as part of his financial portfolio, including BCH.

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