Crypto Exchange Owner Gets 10 Years for Turning Fake Car Auctions Into Cryptocurrency

 The Department of Justice stands in the early hours of Friday morning, March 22, 2019 in Washington, DC.

The Department of Justice stands in the early hours of Friday morning, March 22, 2019 in Washington, DC.
Photo: Photo by Drew Angerer (Getty Images)

Bulgarian man Rossen G. Iossifov was sentenced to 10 years in U.S. federal prison January 12 for his role in a transnational scheme that stole millions of dollars from hundreds of Americans.

Before his downfall, Iossifov ran RG Coins, a cryptocurrency exchange based out of Sofia, Bulgaria that authorities say frequently acted as a vehicle to launder money for a criminal syndicate known as the Alexandria Online Auction Fraud (AOAF) Network—a 20-person crime ring based in Bucharest that stole from at least 900 Americans via online auction fraud schemes.

Members of the network typically posted advertisements for fake luxury goods (usually cars, apparently) on websites like Craigslist and Ebay. Once unsuspecting buyers had forked over their cash to the AOAF for the nonexistent products, the criminals would engage in “a complicated money laundering scheme wherein” the money would be converted into cryptocurrency and then transferred “to foreign-based money launderers,” of which Iossifov was one. All told, the criminals were said to have stolen approximately $7 million from victims based in the U.S.

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The feds claim Iossifov played a big role in these schemes, laundering almost $5 million and making a personal profit of $184,000 in the process. His business practices were “designed to both assist fraudsters” and to “shield himself from criminal liability,” the DOJ says. As a result, Iossifov was convicted of “conspiracy to commit a Racketeer Influenced and Corrupt Organizations Act (RICO) offense and conspiracy to commit money laundering.” A total of 17 members of the AOAF crime ring have so far been convicted for their crimes.

This is definitely not the first (or last!) criminal conviction revolving around cryptocurrency. A report from digital asset intelligence firm CipherTrace released last year showed that the shady side of the digital currency economy is booming—with fraud and other related criminal activities on the rise—and just today the President of the European Central Bank, Christine Lagarde, called for global regulation of Bitcoin, condemning its association with “totally reprehensible money laundering activity.”

Bitcoin Keeps Moving On Up, Reaching $33,000 in Value

Illustration for article titled Bitcoin Keeps Moving On Up, Reaching $33,000 in Value

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Just weeks after it shattered its yearslong aspiration of reaching $20,000 in value, Bitcoin is at it again. On Saturday, the cryptocurrency passed $33,000 in value, according to CoinDesk, before dipping slightly throughout the day.

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Bitcoin’s new gains represent an all-time high for the currency, a stunning turnaround considering where it was almost a year ago. In March, Bitcoin lost 50% of its value in two days, dropping to below $4,000, mirroring the volatility on Wall Street during the early days of the pandemic. Nonetheless, the world’s leading cryptocurrency closed out the year with an increase of more than 300%, per CoinDesk. At the time of publication of this blog, it had increased 10.62% in the past 24 hours and had a $605 billion market cap.

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Nonetheless, as we’ve said before, this isn’t meant to be encouragement to go out and buy Bitcoin. (Considering that we are currently in a global health crisis, please do not use your hard-earned savings to buy Bitcoin). The cryptocurrency is famously moody, and in recent years has delivered as much excitement as it has despair.

Case in point: In 2017, the last time Bitcoin got close to $20,000 in value, it lost more than 80% of its value the following year.

Bitcoin has undoubtedly benefitted from increased oversight, such as the creation of the FICO cryptocurrency risk assessment solution for banks, as well as more institutional investment and support. In November, the Guggenheim Macro Opportunities Fund announced that it may seek to invest up to 10% of its net asset value in Bitcoin. PayPal also gave Bitcoin and other currencies a thumbs up last year when it announced that it would accept cryptocurrency for online payments and also allow its users to buy, sell, and hold cryptocurrencies.

Other investing power players, such as Rick Rieder, chief investment officer of global fixed income at BlackRock, the world’s largest asset manager, said that Bitcoin was “here to stay” and that it had potential to replace gold. That said, as of November Rieder had not added Bitcoin to any of his investment portfolios.

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Bitcoin’s new record has caused a stir, with some financial experts saying that it’s on the road to increase even more. Others disagree and say it’s way overpriced, possibly by more than 50%, and that its real fair value is about $12,000.

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Cryptocurrency Exchange Coinbase Reportedly Paid Women and People of Color Like Shit

Illustration for article titled Cryptocurrency Exchange Coinbase Reportedly Paid Women and People of Color Like Shit

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The cryptocurrency exchange startup Coinbase consistently paid women and people of color less than other employees performing similar jobs, new data from the New York Times has found, exposing a glaring pay gap that’s large even by the tech industry’s miserable standards.

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According to salary details analyzed by the Times for roughly 830 employees through the end of 2018, women employees at Coinbase were paid an average of $13,000, or 8 percent, less than men with comparable titles at the company. The 16 salaried Black employees included in the data also made significantly less, at an average of $11,500, or 7 percent, less than other employees in similar jobs.

The Times’ analysis was conducted by Alexandra Marr, an economist who frequently parses data for court cases involving pay bias. In analyzing the data, Marr also found that when Coinbase’s stock options were taken into account, the pay gap between white and Black employees grew to 11 percent, even as the rate of compensation for women and men remained roughly even.

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The accuracy of the data was confirmed by nine employees whose salary information had been included, who spoke on behalf of themselves and colleagues whose salary information they knew.

Coinbase — which recently told regulators that it intends to file for an initial public offering — was already facing a mounting PR crisis after some 15 former employees, most of them black, publicly accused the company of “tokenizing” them in November 2020.

“Most people of color working in tech know that there’s a diversity problem,”one of those employees, 25-year-old Alysa Butler, told the Times. “But I’ve never experienced anything like Coinbase.”

The new data represents the strongest corroboration of those allegations of discrimination to date, and will likely fan the flames of an ongoing discourse around the pay irregularities and racial discrimination that many workers say is all too common in the tech industry.

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L.J. Brock, Coinbase’s chief people officer, told the Times in a statement that the company had initiated a comprehensive review of salaries across the company up to and including late 2018.

Coinbase Leaves Ripple to Twist in the Wind

Illustration for article titled Coinbase Leaves Ripple to Twist in the Wind

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Ripple’s rough few days just got way worse. After the fintech company was the subject of an SEC lawsuit over its flagship XRP token last week, Coinbase announced in a Tuesday blog post that trades of Ripple would be suspended on its platform.

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Per the blog, Ripple fans can continue trading the token in a limited capacity until the he XRP suspension goes into effect on January 19th. Coinbase noted that this wouldn’t hamper its customers’ access to their XRP wallets, nor would it keep them from using those same wallets for their day-to-day deposits and withdrawals.

Getting the boot from the largest digital currency exchange in the country is a pretty serious rejection—and one that’s compounded by earlier blanket bans from OKCoin and Bitstamp, two mid-sized currency exchanges that cut ties in the immediate aftermath of the SEC’s suit. XRP’s value on Coinbase’s site has been in free fall over the past week, shedding more than half of the valuation it held before the SEC spat came to light.

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For those that need a refresher, the SEC’s core claim was that Ripple had spent the past seven years selling XRP as a currency, when, in fact, it should have been classified as a security all along, and subject to the sorts of investor-facing public disclosures that are required of securities so those investors can assess the risks involved. The SEC alleged that over the past seven years that Ripple’s investors were kept in the dark, the company raised “at least” $1.38 billion dollars, and continued to use those funds to fuel it business operation “without disclosing how it was doing so,” the SEC stated.

In response to these charges, Ripple CEO Brad Garlinghouse initially defended XRP’s currency title in a series of Tweets before devolving into a conspiratorial-sounding diatribe that alleged—among other things—that the Chinese government had some sort of control over fellow cryptocurrencies bitcoin and ether. We’ve reached out to Ripple for comment and will update if we hear back.

Ripple Claims Bitcoin Is ‘Chinese-Controlled’ While Announcing New Lawsuit From SEC

File photo of Ripple CEO Brad Garlinghouse at TechCrunch Disrupt SF 2018 on September 5, 2018 in San Francisco, California.

File photo of Ripple CEO Brad Garlinghouse at TechCrunch Disrupt SF 2018 on September 5, 2018 in San Francisco, California.
Photo: Steve Jennings (Getty Images)

The Securities and Exchange Commission plans to sue Ripple in federal civil court for selling unregistered securities, according to a news release published online by the cryptocurrency company late Monday. Ripple defended its cryptocurrency, known as XRP, as a valid currency but then drifted into conspiracy-laden language, saying that competitor coins like bitcoin and ethereum are “Chinese-controlled.”

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The SEC’s impending lawsuit reportedly revolves around the question of whether cryptocurrencies like Ripple’s XRP are primarily investment contracts that should be regulated by the federal government or primarily currencies that can escape several rules around financial disclosure to investors.

While bitcoin, the most famous blockchain-based currency, was released in a decentralized way by a pseudonymous programmer, XRP was launched in 2012 by Ripple Labs and San Francisco-based Ripple is still the largest owner of XRP. The digital asset is the third largest cryptocurrency in the world after bitcoin and ether.

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Brad Garlinghouse, the CEO of Ripple, defended the company in a series of tweets late Monday arguing that the outgoing chairman of the SEC, Jay Clayton, was “picking winners and trying to limit US innovation in the crypto industry” by only supporting bitcoin and ether.

“The SEC – out of step with other G20 countries & the rest of the US govt – should not be able to cherry-pick what innovation looks like (especially when their decision directly benefits China). Make no mistake, we are ready to fight and win – this battle is just beginning,” Garlinghouse tweeted.

Garlinghouse, who previously worked as a senior vice president at Yahoo and president of mobile communications at AOL in the 2000s and early 2010s, only hinted in his tweet at something that was made much more explicit in the company’s press release—namely, that China somehow controls bitcoin and ether.

“XRP consistently ranks among the top three virtual currencies by market capitalization—alongside bitcoin and ether, the two Chinese-controlled virtual currencies that the SEC has stated are not securities,” Ripple said in a six-page defense posted online.

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Ripple did not immediately respond to an emailed question early Tuesday about how bitcoin and ether might be controlled by the Chinese government. The SEC’s lawsuit has not yet been filed, though Reuters reports it could be coming as soon as this week.

The Wall Street Journal, which was the first to report the news, notes that while the SEC has gone after several digital currency peddlers in recent years, Ripple is the largest crypto company to attract unwanted attention from the feds. Ripple had a valuation of $10 billion in 2019. Ripple co-founder Chris Larsen is likely to be personally named in the lawsuit along with Garlinghouse, according to the WSJ.

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Cryptocurrencies plunged overnight on the news of the impending SEC action against Ripple, with bitcoin down over 5% and ether down over 7%. XRP also plunged in price late Monday and early Tuesday. Even without the SEC action, several investors have expected bitcoin to tumble after recently reaching a record high of over $23,000.

Hackers Steal Thousands of Customer Emails From Popular Crypto Wallet

Illustration for article titled Hackers Steal Thousands of Customer Emails From Popular Crypto Wallet

Photo: Rob Kim / Stringer (Getty Images)

Hackers have released over 270,000 email addresses associated with customers of the popular hardware-based cryptocurrency wallet Ledger. The leak, which allegedly stemmed from a company hack last July, appears to contain over 270,000 customer emails and other identifying information.

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The hack does not directly affect the security of the hardware wallets and only involves customer email addresses, profiles, and postal addresses, according to the company.

“It is a massive understatement to say we sincerely regret this situation. We take privacy extremely seriously,” Ledger tweeted. “Avoiding situations like this are a top priority for our entire company, and we have learned valuable lessons from this situation.”

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“We’re still investigating this ongoing issue, but the dumped content may be Ledger’s e-commerce database that was exposed during the data breach in June 2020. This database may be used by scammers for phishing attacks through emailing and text message campaigns,” said a company spokesperson. “Our Customer Support team has been working to notify our users via Twitter and responding to questions while also reporting all tweets and Reddit posts that contain a link to the database.”

The leaked data appeared on RaidForums.com, a security message board, and was allegedly posted by a user who had seen the data for sale on other hacker boards for a considerable amount of bitcoin. Independent verification of one of the leaks showed about 191,000 unique email addresses, although other alleged caches could display different data.

“The data was initially sold before being dumped publicly on RaidForums which includes names, physical addresses, email addresses, and phone numbers,” the poster wrote.

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“Someone was tryin’ to sell me this for 20 coins, lol,” another poster wrote.

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“This is important because it offers now new vector threats (including physical) to alleged owners of cryptocurrency,” said Ouriel Ohayon, CEO of crypto company ZenGo. He believes that this isn’t a problem with the blockchain itself but with the tools used to protect consumer data.

“The problem is not that of decentralization of private exchange because Ledger is already a decentralized solution,” he said. “The problem is that of database dependencies when you sell hardware or sell anything.”

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Bitcoin author and educator Andreas M. Antonopoulos still thinks Ledger is culpable in this case.

“Companies are forced to retain this data and a lot of government regulations (tax, audit, etc.) make companies collect data on the government’s behalf,” he said, likening it outsourcing surveillance. He also expects private companies, especially ones like Ledger, to discard this data regularly.

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“If there’s a breach like this, there’s an obligation to educate and inform,” he said. “Ledger failed that duty.”

Given extensive problems with wallet security throughout the industry, this ding reduces customer trust in products that could be protecting, given current bitcoin prices hovering at $22,000, at least five-figure investments.

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Fintech App Threatens to Sue Facebook and Friends Over Diem Name

Illustration for article titled Fintech App Threatens to Sue Facebook and Friends Over Diem Name

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Diem it! A London-based finance app called Diem is threatening to sue the Diem Association, the consortium in charge of what was once known as the Libra token.

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Diem Group Ltd—not to be confused with the Diem Association—is considering suing the consortium over the use of the name. The small fintech company seems to believe that prior usage of the name is enough to withstand the onslaught of legal wrangling Facebook is liable to send their way.

The original Diem app soft-launched this October although it has not released a public product.

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“We are in the process of considering our legal options, but we find it surprising, given previously alleged trademark infringements and lawsuits surrounding this project, that the Foundation seemingly made the same mistake again,” said Diem Group Limited CEO Geri Cupi in a release.

The Libra Association rebranded as the Diem Association early this month partially in hopes of distancing itself from the negative connotations of the original product.

“Now transitioning to the name ‘Diem,’ which denotes a new day for the project, the Diem Association will continue to pursue a mission of building a safe, secure and compliant payment system that empowers people and businesses around the world,” wrote the Diem Association in a release last week.

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The Diem Group aims to be the David in this cryptobible story, attacking lumbering Goliath to its last breath.

“Over the past 24 hours we have been working hard to respond to concerns from our customers and to avoid further confusion. We have invested significant resources in building a distinctive brand and associated partnerships, “ said Cupi. “As a small start-up we are concerned that customer confusion resulting from Libra’s actions will significantly impact our growth.”

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Cupi said his company is consulting with its lawyers. A request for contact went unanswered.

A Pared-Down Version of Facebook’s Libra Project Could Launch as Soon as January

Illustration for article titled A Pared-Down Version of Facebooks Libra Project Could Launch as Soon as January

Photo: Josh Edelson (Getty Images)

Facebook’s long-anticipated cryptocurrency venture, Libra, could go live as early as January, three people involved with the matter told Financial Times this week. But don’t get too excited just yet: Thanks to a torrent of federal scrutiny and many of its chief investors bailing on the project, its scope has been significantly scaled back.

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The Facebook-led Libra Association now intends to launch just “ a single coin backed one-for-one by the dollar” with plans to roll out additional currencies and a “digital composite” of all its coins at an unspecified future date, one source told the outlet. It’s a far cry from Libra’s original sales pitch back in June 2019 to “reinvent money” and “transform the global economy” by leveraging Facebook’s billions of users to scale its global, blockchain-based payment network.

But that was in the before times. Before the covid-19 pandemic wreaked havoc on the global economy, for one, and before a slew of troubles plagued the project. Seven of the Libra Association’s high-profile members, including PayPal, Stripe, Visa, eBay, and Mastercard, have pulled out of the project since then. Their exodus came after financial regulators in the U.S., India, China, the European Union, and elsewhere publicly opposed Libra and the so-called “crypto mafia” behind it and voiced concerns that the cryptocurrency network could threaten monetary stability or be flooded with money laundering schemes. Officials also worried that Facebook, a company that’s no stranger to screw-ups for the history books, was attempting to circumvent their control.

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Facebook also ended up rebranding the digital cryptocurrency wallet, which it owns outright, that it had planned for the project. The company changed it from Calibra to Novi after the former’s logo became the subject of a trademark infringement lawsuit.

Libra’s official launch date remains in limbo for now, but could come as early as January pending approval to operate as a payment service from the Swiss Financial Market Supervisory Authority, sources told Financial Times under the condition of anonymity. As for Novi, one worker familiar with the matter said that the wallet was “ready from a product perspective” but Facebook’s holding back on its launch and instead focusing on “half a dozen high-volume remittance corridors” including the U.S. and several Latin American countries.

[Financial Times]

Bitcoin Could Hit $20K Again But This Time No One Cares

Illustration for article titled Bitcoin Could Hit $20K Again But This Time No One Cares

Photo: KAZUHIRO NOGI / Contributor (Getty Images)

If you’ve been watching the crypto markets over the past few weeks you’ll have noticed something special: bitcoin, everyone’s favorite decentralized digital currency based on hype, lies, and general malfeasance, is about to hit $20,000—if it can break through what is known as a “resistance zone,” a financial term describes a price that an asset just can’t reach.

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The currency was last at $20K on December 17, 2017, during a runup that brought thousands of new “investors” into the marketplace. I distinctly remember seeing the busboy at a restaurant buying bitcoin and ignoring his boss that December, a corollary to the old Wall Street saw that when your shoeshine guy is giving you stock tips then it’s time to sell. Whether or not this boom will lead to a bust is unclear, but all signs point to “Yes.”

The rise in BTC price usually coincides with global unrest or radical changes in the bitcoin algorithm. The currency itself appeared during the 2008 crash that took out financial firms across the globe and the last boom seemed to coincide with a crackdown on crypto by multiple world governments. Cryptocurrency fans see the digital tokens as a hedge against political unrest—the kind of political unrest that could follow the election of a major world leader.

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A bitcoin investor, Daniel Moravec of Bitcoin Mavericks, said that he believes the rise in price is spurred by threats of inflation in 2021.

“You can’t print more bitcoins once they are gone,” he told us. “Also I believe the current inflation rates of bitcoin is actually less than the current inflation rate of fiat currency.”

What does that mean in Main Street talk? The cypherpunks shorting the global economy. And will it keep going up? Probably for a little while, at least according to investors.

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“Investors are positioning for a bull market continuation,” Vishal Shah, founder of derivatives exchange Alpha5, told CoinDesk. Shah saw options sales in the currency reaching an all time high, a factor that suggests that bigger players are ready to bet on BTC.

While there is some mainstream media coverage, the same flurry of general excitement that accompanied the 2017 rise is nowhere to be seen. Cryptocurrencies are fickle things and bull runs are rare and dangerous. The last bull run saw BTC fall over to about $4,000 in November 2018, leaving many fans exhausted and out of cash. In many cases, you’d be better off buying and reselling a PS5 or new Xbox if you’re looking for an economic sure thing.

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In the end, a quiet BTC rise might be best for everyone. Ben Munster, a former crypto journalist, told Gizmodo that he welcomed the silence: “Maybe this time bitcoin fans will make enough to stop tweeting. But I doubt it.”

Attackers Dupe GoDaddy Staff Into Helping Them Take Down Cryptocurrency Services

Illustration for article titled Attackers Dupe GoDaddy Staff Into Helping Them Take Down Cryptocurrency Services

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Roughly one year after a data breach at GoDaddy compromised 28,000 customer accounts, the world’s largest internet domain registrar is once again at the center of a security scandal. Hackers brought down several cryptocurrency services using GoDaddy domains in recent weeks, and apparently the company’s own staff unwittingly helped in these attacks.

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Hackers purportedly duped GoDaddy employees into handing over the reins to several cryptocurrency services’ web domains, and then used those permissions to make unauthorized changes and bring down the sites, per a report from the cyber-centric blog Krebs On Security on Saturday. While it remains unclear how many companies fell for this scam, the cryptocurrency trading platform Liquid and mining service NiceHash uncovered attacks within days of each other.

“On the 13th of November 2020, a domain hosting provider ‘GoDaddy’ that manages one of our core domain names incorrectly transferred control of the account and domain to a malicious actor,” said Liquid CEO Mike Kayamori in a blog post on Wednesday. “This gave the actor the ability to change DNS records and in turn, take control of a number of internal email accounts. In due course, the malicious actor was able to partially compromise our infrastructure, and gain access to document storage.”

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NiceHash pushed out a blog post on Tuesday warning users that it discovered several unauthorized changes in the settings for its domain registration records. The company immediately froze all user funds, which remained inaccessible for roughly 24 hours, and launched an investigation into the matter, but ultimately found that “no emails, passwords, or any personal data were accessed” by hackers.

What’s also unclear is how these hackers went about scamming GoDaddy employees into transferring ownership of the domains in the first place. In a statement to Engadget, a company spokesperson confirmed that a “limited number” of employees had fallen for “social engineering” attacks that allowed hackers to tamper with accounts and domains without authorization, but didn’t go into further detail.

Social engineering refers to attacks in which hackers use their social skills to harvest information from an organization or its networks, according to the Cybersecurity and Infrastructure Security Agency. Phishing, an attack in which hackers use emails or malicious websites from seemingly credible organizations to steal information, falls under that category.

The spokesperson said that GoDaddy responded by locking accounts, undoing any changes that the hackers made, and working with victims to help them regain access.

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It’d be really embarrassing if GoDaddy employees fell victim to the same kind of voice phishing tactics caused another data breach in March. That campaign compromised several domains, including the transaction brokering site Escrow.com, and GoDaddy later admitted that one of its employees had fallen victim to “a spear-phishing or social engineering attack.”

As Krebs notes, hackers have increasingly relied on voice phishing, or “vishing,” to attack corporations in recent months. That’s when attackers use one-on-one phone calls, often pretending to be tech support for a target’s employer, to try to steer targets toward phishing sites to harvest account credentials and other sensitive company information.

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Although we don’t know exactly how the hackers pulled one over on GoDaddy’s staff, this incident is a reminder that humans aren’t perfect. Then again, these kinds of attacks aren’t exactly new, so instead of just gaping at human error, perhaps corporations should focus on strengthening both human and machine security protocols to try to prevent incidents like this from happening in the future.

[Krebs on Security]

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