Two arrested in Germany for hacking computers they used to generate bitcoins

The suspects used malware to build a botnet, German police said

German police have arrested two persons they accuse of hacking computers and using them to generate bitcoins police valued at more than €700,000 (US$954,000). A third suspect was not taken into custody, police said.

The suspects allegedly took control of consumer computers with malware spread via the Internet in order to create a botnet, a spokeswoman for the German Federal Criminal Police Office said Thursday. The botnet was used to steal digital identities and to generate bitcoins, she said. The spokeswoman declined to say which malware was involved, or for what the stolen digital identities were used, citing ongoing investigations.

Bitcoins can be generated or "mined" by getting computers to solve difficult calculations. To mine significant numbers of bitcoins takes a lot of computing power, requiring investment in equipment and electricity. A botnet comprising a network of penetrated computers controlled by a third party, can be used to do the job, offloading the costs onto the computers' owners.

While not a full-fledged currency in Germany, bitcoins are permitted by the German Federal Ministry of Finance for use in private transactions. For commercial use of bitcoins, however, a company needs the permission of the Federal Financial Supervisory Authority (BaFin).

As part of the investigation, searches were conducted on Monday night in the states of Bavaria and Lower Saxony with the help of the Border Protection Group 9 (GSG 9), an anti-terror and special operations unit, the police said. Besides the bitcoins, the police found evidence of other hacking activities, fraud, violations of copyright law as well as criminal offenses related to the spread of pornographic texts, the police said.

While there are three suspects, only two were arrested. The police did not get an arrest warrant for the third, the spokeswoman said. In Germany, certain conditions need to be met to get an arrest warrant. The suspect for instance has to be a flight risk or it must be likely that the suspect will dispose of further evidence, she said, adding that those conditions were not met in this case.

The police did search the third suspect's house though and conducted an interview, she said.

The suspects will now be heard and the police will examine the seized evidence, which includes computers and storage media, the spokeswoman said.

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