Report: Colonial Pipeline Paid Nearly $5 Million In Ransom To Hacker Group

Colonial Pipeline paid nearly $5 million in ransom to Eastern European hackers who compromised the energy company’s pipeline system according to a Thursday report from Bloomberg.

The gasoline, diesel, and jet fuel company paid the ransom to a hacker group called DarkSide earlier this week, the outlet said, based on reports from two sources close to the situation. The deposit helped get the pipeline back online on Wednesday afternoon, though because of the stoppage, it still may be several days before the supply is back to normal across the southeast.

“Colonial Pipeline Co. paid nearly $5 million to Eastern European hackers on Friday, contradicting reports earlier this week that the company had no intention of paying an extortion fee to help restore the country’s largest fuel pipeline, according to two people familiar with the transaction,” Bloomberg noted Thursday.

The company paid the ransom in “untraceable cryptocurrency,” according to the outlet, and the Biden administration was aware that that the company intended to pay the $5 million to hackers the White House suggested, Wednesday, could be Russian or affiliated with Russia. The group, which admitted they were responsible for locking up Colonial Pipeline’s servers on Monday, claims they are not affiliated with any government and that their motivation is primarily financial, not political.

Media outlets insisted, earlier this week, that Colonial Pipeline had no intention of paying the nearly $5 million that DarkSide demanded to release the clogged server. Fox Business reported Wednesday that “the pipeline operator refused to pay, enlisting help from the Department of Energy, as well as federal, state and local authorities instead.”

Bloomberg claimed Thursday that those reports were incorrect.

As for the Biden administration, the president claimed on Wednesday that he was in close contact with Colonial Pipeline officials and that he was aware of the progress the company was making to restore service. The White House did say that they did not pressure Colonial Pipeline to pay any ransom, though, on Monday, a deputy National Security Advisor admitted that “companies are often in a difficult position if their data is encrypted and they do not have backups and cannot recover the data.”

The FBI does not advise paying a ransom to hackers, as it is likely to encourage further attacks.

Colonial Pipeline, the U.S. government, and American consumers are still reeling from Friday’s attack, which “impacted fuel deliveries and triggered instances of panic-buying amid concerns of a shortage. Several governors declared states of emergency in response to the crisis,” according to Fox Business. In some areas, the attack drove fuel prices to a seven-year high; in some states, fuel was largely unavailable, causing lines and hours-long waits for gasoline.

The Biden administration is facing sharp criticism for its handling of the crisis. Yesterday, the White House announced that it would respond to the shortage by forming a blue-ribbon committee to explore the possibility of forming a second committee to develop proposals for Congress, which could allow the administration to waive certain trade restrictions in the event of another hacking event. On Thursday, President Joe Biden signed an executive order aimed at preventing future hacking issues, per the Verge.

“The executive order outlines a number of initiatives, including reducing barriers to information sharing between the government and the private sector, mandating the deployment of multi-factor authentication in the federal government, establishing a Cybersecurity Safety Review Board modeled after the National Transportation Safety Board, and creating a standardized playbook for responding to ‘cyber incidents,’” the outlet noted.

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