Russian Spies Used Bitcoin in 2016 Election Hacking

In early 2016, Russian intelligence officers were able to get their hands on a new collection of the virtual currency Bitcoin. They utilized the currency for a slew of campaign-related activities to interfere with the US presidential election.

The Russian spies used some of the Bitcoins to pay for the registration of a website, dcleaks.com, where they later posted emails that had been stolen from Hillary Clinton's presidential campaign. When the operatives needed a computer server to host the dcleaks site, they paid for that with Bitcoins as well.

An indictment was filed on Saturday against the 12 Russians accused of hacking the DNC and undermining Hillary Clinton's campaign.

The indictment said that the Russian hackers targeted more than 300 people, secretly monitored throngs of computer, and covertly implanted malicious computer code in hundreds of files using a hacking tool that the GRU called X-Agent, a reference to Marvel Comics.

The email was actually from Aleksey Lukashev, a senior lieutenant in Russian military intelligence, using the account "john356gh" to mask his purpose, US officials say. The email contained an embedded link that secretly opened Podesta's account to a hacking team at 20 Komsomolskiy Prospekt, near Moscow's Red Square.

Two days later, the Russian cyber thieves stole - and later leaked - more than 50,000 of Podesta's private emails, undercutting Clinton's bid for the White House.

Lukashev's team, called Unit 26165, used so-called spearphishing, which involves trapping victims with emails that appear to be from known senders, to penetrate the Democratic digital networks. They modified campaign websites to redirect visitors to a digital domain they had registered, actblues.com, which appeared to be a fundraising platform for the Democrats - but wasn't. Later they erased digital logs in an attempt to hide their tracks.

The revelations have readdressed some key concerns regarding bitcoin and other cryptocurrencies: their haunting anonymity. This has transformed into both a tool and a challenge for intelligence agencies in the battles between nation states.

Bitcoin, the indictment added, "allowed the conspirators to avoid direct relations with traditional financial institutions, allowing them to evade greater scrutiny of their identities and sources of funds."

On the other hand, some argue that Bitcoin isn't completely untraceable. Small slip-ups in the team's operational security allowed investigators to tie, for example, an email address used to access a given Bitcoin wallet with the one used to pay for a VPN.

Moreover, the distributed ledger technology that allows for anonymous international payments in the first place also creates an important and potentially useful investigative tool for those informed enough to take advantage of it.

The Russians also created Bitcoins themselves through the process known as mining, the indictment said. With mining, computers compete to unlock new Bitcoins by solving difficult computational problems. This requires expensive equipment and lots of electricity, but that was apparently not a hindrance to the Russians.

"The fact that cryptocurrencies are global and real time means that you might only find out about these things after the fact," said Jonathan Levin, a co-founder of Chainalysis, a firm that helps governments track cryptocurrency payments. "We need to think about the responsibilities that we all have in a world where payments move seamlessly across borders in the blink of an eye."