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Chinese Hackers Stole Millions in COVID Benefits .

Justin Malonson

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We’ve previously detailed the billions in COVID relief funds that were stolen. As Bob Hoge noted in October:

What happens when you shut down the country and then flood it with trillions of dollars in loosely monitored aid? You get sky-high inflation, which we’re seeing—and you also get rampant fraud and theft. The Wall Street Journalis reporting that the Labor Department alone was fleeced out of almost $45 billion in unemployment funds, while the NY Post estimates the total ripped off from all relief programs comes in at a staggering $600 billion. To put it in perspective, that’s almost as much as our entire 2022 military budget of $778 billion.

It should come as little surprise that some of those funds were snatched by foreign nationals. Bob continued:

The effort might come a bit too late. You may have always thought those “Nigerian prince” emails were silly, but NBC News reported in August about the unchecked theft of funds by foreign nationals:

Russian mobsters, Chinese hackers and Nigerian scammers have used stolen identities to plunder tens of billions of dollars in Covid benefits, spiriting the money overseas in a massive transfer of wealth from U.S. taxpayers, officials and experts say. And they say it is still happening.

Now, however, NBC is reporting that hackers linked to the Chinese government were responsible for the theft of millions of those dollars.

From that report:

Hackers linked to the Chinese government stole at least $20 million in U.S. Covid relief benefits, including Small Business Administration loans and unemployment insurance funds in over a dozen states, according to the Secret Service.

The theft of taxpayer funds by the Chengdu-based hacking group known as APT41 is the first instance of pandemic fraud tied to foreign, state-sponsored cybercriminals that the U.S. government has acknowledged publicly, but may just be the tip of the iceberg, according to U.S. law enforcement officials and cybersecurity experts.

This is far from the first incident involving Chinese hackers. The DOJ announced the indictments of five Chinese nationals (also associated with APT41) in September 2020, largely in relation to the video game industry.

Our charges allege two distinct categories of criminal conduct:

First, as the core of APT-41’s computer hacking, the Chinese defendants targeted well over 100 victims worldwide in a variety of industries and sectors that are, sadly, part of the standard target list for Chinese hackers.  These criminal acts were turbo-charged by a sophisticated technique referred to as a “supply chain attack,” in which the Chinese hackers compromised software providers around the world, and modified the providers’ code to install backdoors that enabled further hacks against the software providers’ customers.

Second, and as an additional method of making money, several of the Chinese defendants compromised the networks of video game companies worldwide (a billion-dollar industry) and defrauded them of in-game resources.  Two of the Chinese defendants stand accused, with two Malaysian defendants, of selling those resources on the black market, through their illicit web site.

 

Tasos Katopodis/Pool via AP

As noted in the NBC report, however, the ties to the Chinese government up the ante:

And whether the Chinese government directed APT41 to loot U.S. taxpayer funds or simply looked the other way, multiple current and former U.S. officials say, the theft itself is a troubling development that raises the stakes. One senior Justice Department official called it “dangerous” and said it had serious national security implications.

“I’ve never seen them target government money before,” said John Hultquist, the head of intelligence analysis at the cybersecurity firm Mandiant. “That would be an escalation.”

The Chinese Embassy in Washington did not respond to requests for comment.

There’s been no indication yet whether and to what extent the Biden administration will address this revelation. Per NBC, the government is remaining tight-lipped on the matter:

The Labor Department, the Small Business Administration, the Cybersecurity and Infrastructure Security Agency and the White House all declined to comment and referred NBC News to the Justice Department. The FBI and the Justice Department declined to comment. The Department of Homeland Security did not respond to requests for comment.

 

 

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Justin Malonson is an is an American internet entrepreneur, software developer, investor, author and technology executive. He is the founder of social-networking service Lyfeloop and CEO of international web-development agency Coastal Media Brand.

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