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Hangzhou-based Listed Company Lost 10 Million Yuan in a Bitcoin Ransom Attack

Police in Hangzhou, East China’s Zhejiang province, has arrested a hacker on accusations of hacking into a listed company and demanding a ransom to be paid in bitcoin, local news media reported on Thursday.

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In early August, a public company in the city’s Binjiang district fell prey to large-scale massive distributed denial of service attacks, as DDoS attacks are known, which shut down the computer network and prevented the company from shipping out a large number of orders which were worth roughly 10 million yuan.

Shortly after the cyber attack, a senior executive of the firm received a text message and a phone call from an unknown overseas telephone number demanding 1 bitcoin for stopping DDoS attacks, the equivalent of around $7,000 at the time. The blackmailer threatened to increase DDoS attack volume and double the extortion fee to 2 bitcoins if the the payment was not made within the specified time limit. The company refused to caving to the hacker’s demands and  reported the issue to local police.

An investigation by police found that many the source the DDoS attacks had many sources, some amount of faux traffic from some places in China while others from abroad.

The police were taken aback when identifying the suspect. The 40-year-old criminal who graduated with just a middle-school certificate is a self taught-hacker, having no work experience related to internet. The man, who was not named, was sentenced to 10 years in prison for raping a woman and has history of drug abuse.

According to the police, the criminal went abroad and used an international SIM card to avoid detection after cyber attacks. He had received bitcoin ransom in Southeast Asia by conducting the similar scheme earlier, and tried to exchange bitcoins for fiat money. But when launching the malicious cyber attack for the first time in China, the man has found himself in police custody.

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