BILS - U.S. Treasury trades disrupted amid record-breaking year for ransomware

2023-11-10 05:58:04 ET

Ransomware attacks are on the rise, posing new challenges to companies, businesses and entities in an age when nearly everything is done online. New technologies, open banking and the expansion of remote transactions have all made the task of cybersecurity even more critical, and those that fail to meet the moment can risk their entire systems. Another wakeup call this week showed the extent of the potential disruptions, with a ransomware attack on the world's largest bank interrupting settlements in the U.S. Treasury market.

What happened? Sources say that LockBit, a notorious cyber group with ties to Russia, infected the Industrial & Commercial Bank of China, one of the globe's biggest banks by assets. While the market's overall functioning remained intact, the cyber attack prevented swathes of Treasury transactions from clearing and prompted deals to be rerouted. Bloomberg even reported that trades "traversed Manhattan on a USB stick," with the ICBC forced to send the "required settlement details to those parties by a messenger carrying a thumb drive to limit the damage."

"We are aware of the cyber security issue and are in regular contact with key financial sector participants, in addition to federal regulators," declared a spokesperson at the U.S. Treasury Department. "We continue to monitor the situation."

Not the first time: Suspected perpetrator Lockbit has also been linked to hits on Boeing ( BA ), while there have been other recent attacks and ransoms paid by Clorox ( CLX ), Caesars ( CZR ) and MGM Resorts ( MGM ). The latest cyber incident at ICBC, an institution deemed systemically important by the Financial Stability Board, will be on the radar of the entire financial system, especially given its impact on the liquidity of U.S. Treasuries. According to cybersecurity firm Corvus Insurance, ransomware attacks have nearly doubled in the first three quarters of this year, compared with the same period in 2022.

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