November 14, 2023

World's Largest Bank Falls Victim to Hack, Forces Reliance on USB Stick for Trade Settlement: Bloomberg Report

The New York branch of the Industrial & Commercial Bank of China (ICBC), boasting $5.74 trillion in total assets, is under investigation as engineers seek to understand how hackers breached its security.

Following the cyberattack, ICBC resorted to settling trades via a USB stick, compelling banks, brokerages, and market makers to reroute trades, as per Bloomberg's report.

The incident disrupted the bank's participation in Treasury bond auction, with investigators pointing to the Lockbit ransomware gang, known for its ties to Russia, as the likely perpetrator.

While not explicitly naming the source, Bloomberg notes that banking leaders acknowledge the hack underscores concerns about a potential system-wide attack capable of halting the traditional financial system.

The ICBC is contemplating seeking assistance from China's Ministry of State Security in response to the breach.

Ransomware attacks on the financial industry have seen a surge in recent years, according to a Sophos cybersecurity report.

"The 2023 survey revealed that the rate of ransomware attacks in financial services continues to rise. It went up from 55% in the 2022 report to 64% in this year’s study, which was almost double the 34% reported by the sector in the 2021 report. Although the sector experienced an increased attack rate, it was below the cross-sector average of 66%."

Sophos notes that financial institutions are intensifying efforts to enhance security. In a survey of 3,000 cybersecurity/IT leaders, including 336 in the financial services sector, 81% of organizations reported encrypting their data — a 50% increase from the previous year.

Unlike the traditional banking system, which has recently experienced technical difficulties, the Bitcoin network distinguishes itself with its unwavering 100% uptime. Its decentralized structure, operating without a single point of failure, has guaranteed uninterrupted functionality since its establishment.

In contrast, the recent technical challenges faced by prominent banks underscore the susceptibility of centralized systems. While banks play a crucial role in the financial infrastructure, relying on centralized processing systems can result in widespread disruptions, as demonstrated in this particular incident.

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