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.
The company paid the hefty ransom in difficult-to-trace cryptocurrency within hours after the attack, underscoring the immense pressure faced by the Georgia-based operator to get gasoline and jet fuel flowing again to major cities along the Eastern Seaboard, those people said. A third person familiar with the situation said U.S. government officials are aware that Colonial made the payment.
Once they received the payment, the hackers provided the operator with a decrypting tool to restore its disabled computer network. The tool was so slow that the company continued using its own backups to help restore the system, one of the people familiar with the company’s efforts said.
On Wednesday, media outlets including the Washington Post and Reuters, also based on anonymous sources, reported that the company had no immediate intention of paying the ransom.
The FBI discourages organizations from paying ransom to hackers, saying there is no guarantee they will follow through on promises to unlock files. It also provides incentive to other would-be hackers, the agency says.
However, Anne Neuberger, the White House’s top cybersecurity official, pointedly declined to say whether companies should pay cyber ransoms at a briefing earlier this week. “We recognize, though, that companies are often in a difficult position if their data is encrypted and they do not have backups and cannot recover the data,” she told reporters Monday.
Such guidance provides a quandary for victims who have to weigh the risks of not paying with the costs of lost or exposed records. The reality is that many choose to pay, in part because the costs may be covered if they have cyber-insurance policies.
“They had to pay,” said Ondrej Krehel, chief executive officer and founder of digital forensics firm LIFARS and a former cyber expert at Loews Corp., which owns Boardwalk Pipeline. “This is a cyber cancer. You want to die or you want to live? It’s not a situation where you can wait.”